"Massive fiscal and monetary stimulus,
along with unprecedented market interventions, has
completely overwhelmed the capacity of the markets
to effectively price risk. Instead of learning from
past mistakes, policymakers are more determined
than ever to dictate market pricing. Rather
than recognizing the prevailing role Activist central
banking has played in fomenting dysfunctional markets,
policymakers believe market outcomes beckon for
only greater activism. Until governments can begin
to extricate themselves from the manipulation of
interest rates and risk market pricing more generally,
this long cycle of destructive booms and busts will
run unabated." ~ Doug Noland (Prudent Bear,
the current bust is a systemic failure and the climax
of capitalism having run its American course, worse
than endless boom & bust)

"When you add that no default will be declared
a default by the Intl Swaps & Derivative Assn,
you have a guarantee that QE will go to infinity
at the cost of the US currency market first and
the US bond market second. I put this epic event
in the year 2015. I give the US dollar no longer
than June of 2012 before the cracks in its armor
are visible to all." ~ Jim Sinclair

"But please, to our friends in the Big
Media, could we stop saying that we don't know the
location of the missing $1.6 billion of client funds
from MFGlobal? The money is safe and sound at JPMorgan
and other counter-parties. As with Goldman Sachs
et al and American Intl Group, the banks have been
bailed out at the cost of somebody else. And the
various agencies of the federal government are complicit
in the fraud. The effort by former New Jersey Governor
and MFGlobal CEO Jon Corzine to save his firm by
stealing customer funds seems to warrant further
discussion, yet instead we have silence. So why
is it that the Large Media has such trouble reporting
this story? The fact seems to be that the political
Powerz that be in WashingtonDC are protecting JPM
CEO Jamie Dimon from a possible career ending kind
of stumble with respect to MF Global." ~
Chris Whalen (Institutional Risk Analyst)

"European leaders repeat the same kind
of platitudes, [like] we need to get growth going,
[like] austerity will not be enough, but no country
has policies that will achieve growth. I have not
heard a single thing here in Davos that has convinced
me that the European leaders have any sense of what
they need to do and will do. Nobody knows who owes
what to whom, where the risks of a Greek default
are." ~ Joseph Stiglitz (Nobel Prize winning
economist, whose words were the only wisdom or story
worth reporting from the Davos World Economic Forum,
a country club gathering of criminal bankers and
their investment fund cohorts)

"Thank God that at this hour I am dangerous
to the war profiteers of this country, who rob the
people on the one hand, and rob and debase the government
on the other. Then with their pockets and wallets
stuffed with the filthy bloodstained profits of
war, they wrap the sacred folds of the Stars and
Stripes about them and about their blatant hypocrisy
to the world." ~ Kate Richards O'Hare (1917)

"We are up against the abyss. The psychopaths
who ran us over the ledge in 2008 are still doing
the shepherding. They are the 5% controlling the
herd. Even if the current group of psychopaths went
to jail, there would just be another group of Wall
Street psychopaths filling their shoes. That is
the problem with Corporatocracy. A revolving door
turns between these corporations and our government."
~ Davos Sherman Okst (corporatocracy is another
name for the Fascist Business Model)

MONETARY FRAGMENTS

◄$$$ BACKGROUND EDUCATION IS URGED TO LEARN
ABOUT THE ROGUE INDEPENDENT NATURE OF THE US FEDERAL RESERVE. ITS GLOBAL DOMINATION IN WEALTH
CREATION IS CLEAR. ONLY RECENTLY HAS ITS ACCESS
TO MONEY BEEN SO BLANTLY EXERCISED. FOR SOME REASON,
THE US-PUBLIC IS NOT OUTRAGED BY $26 TRILLION BEING
DISPENSED TO THE OWNERS OF THE USFED OWNERS AND
ALL THEIR FRIENDS, THE CENTRAL BANKS. $$$

See an excellent historical treatment, with up-to-date
entries of the TARP era dispensation of $26 trillion
on near 0% loans. The loans will never be repaid,
more like grants. One could think the elite prepared
for purchasing the world's assets on a gift card
replete with privilege. One could also think the
elite have suffered major financial blows in the
last few years from the Western bust, and required
replenishment. Many researchers believe the Western
bankers were tripped into the systemic failure that
began in 2008 and continues today, in retaliation.
Both arguments have merit. The corruption, reliance
upon violent crime, and diversification of the elite
interwoven system is astonishing and impressive.
It extends to the news networks and pharmaceutical
industry. The latter should give warning of intentional
genocide programs with toxic substances and microbe
agents. Monsanto is the food industry agent for
poison, at the genetic level. See the Divine Cosmos
article, more like a long essay (CLICK HERE).
Thanks to JuanC in Argentina
for the shared article.

◄$$$ UKGOVT DEBT HAS SURPASSED GBP 1 TRILLION.
THE DEBT BURDEN IS EVEN HIGHER IF BANK BAILOUTS
ARE INCLUDED. THEY ARE DEAD MONEY INVESTMENTS TO
TURN TOXIC, IF NOT ALREADY. THE UKECONOMY WILL CONTINUE
TO SLOW, AS THEIR CHRONIC RECESSION CONTINUES APACE.
$$$

Naturally, the UKTreasury has blamed unsustainable
levels of spending by the last administration led
by the Labour party. The British public debt
has surpassed the GBP 1 trillion for the first time
ever. The figure rises dramatically when bank system
bailouts are considered in the tally. The debt
is the highest since records began in 1993, and
represents 64% of GDP. The debt service costs are
estimated at GBP 47.6 billion in the current financial
year, rising gradually in future years. The urgency
to bring the deficit under control is widely felt,
but the ability to handle it is nowhere. The nation
suffers from following the American housing &
mortgage boom and bust policy toward total ruin.
The only good piece of news is that borrowing
volume is 10% lower than it was last year. The
debt continues to increase. A grand challenge is
presented to put the national finances back on a
sustainable footing. The situation demands a permanent
0.5% official interest rate, or else the service
costs will explode. Tax receipts are falling short
of the fiscal forecasts. The national economy is
beset by a chronic recession that does not receive
proper reporting. Reliance upon rising rabbit hutch
cottage homes turned out to be a disaster, exactly
as the Jackass forecasted in 2005 and 2006 and 2007.
They are bound by the same fictional economic forecasts
that the Americans are bound to. See the UK Telegraph
article (CLICK HERE).

◄$$$ THE SWISS BANK COMPETITION COMMITTEE
HAS BEGUN A PROBE INTO INTERBANK INTEREST RATE COLLUSION.
THE CORRUPTION WITHIN THE BANKING SYSTEM IS ALMOST
TOTAL, REACHING EVERY LEVEL AND EVERY WESTERN NATION.
EVERY COUPLE MONTHS A NEW SCANDAL IN SWITZERLAND.
$$$

Swiss banking authorities have launched a probe
into twelve US, European, and Japanese banks over
claims of rate fixing for their interbank lending
rates. The Swiss competition commission COMCO
is acting upon information as to potential unlawful
agreements. The allegations centre on Libor and
Tibor, the interbank lending rates. COMCO believes
that collusion between derivative traders might
have influenced the rates, used directly as benchmarks
for financial products such as mortgages. COMCO
said, "Derivative traders working for a
number of financial institutions might have manipulated
these submissions by coordinating their behavior,
thereby influencing these reference rates in their
favor."

COMCO has the the listed banks under investigation.
The banks under review are UBS, Credit Suisse, Bank
of Tokyo-Mitsubishi, Citigroup, Deutsche Bank, HSBC,
JPMorgan Chase, Mizuho Financial, Rabobank, Royal
Bank of Scotland, Societe Generale,
and Sumitomo Mitsui Banking Corporation. See the
BBC article (CLICK HERE).
The last US-based news source to pick up on this
story was the Washington Post. They carefully identified
the Swiss banks, but left out JPMorgan. Take note
that the scandal has not totally worn off from the
central banker wife trading on the currency, after
pillow talk. But the biggest scandal is the one
kept totally out of the news effectively altogether.
The major Swiss banks are fighting to defend
against multi-$billion lawsuits for improper usage
and depletion of allocated Gold & Silver accounts.
Hundreds of clients are in lawsuits since the banks
refused to deliver on the bullion metal upon demand.
They removed it long ago.

◄$$$ A GIGANTIC MINDBOGGLING COUNTERFEIT
CASE HAS BEEN CRACKED IN ZURICH.
IN ALL, $6 TRILLION IN FAKE USTREASURY BONDS HAVE
BEEN SEIZED. THE INVESTIGATION GROUP FROM ITALY
IS CREDITED ON THE CASE, A HUGE MAFIA PROBE. THE
BONDS WERE LIKELY BETTER DESCRIBED AS TAINTED OR
FLAWED, RATHER THAN COUNTERFEITS. $$$

As preface, in the summer of 2009, a highly unusual
story circulated when two Japanese nationals were
arrested trying to smuggle $134 billion of US bearer
bonds into Switzerland
from Italy
at the border. The story quickly died down after
it was subsequently reported that the bonds were
merely counterfeit bearer bonds. Nobody heard much
about it since then, the story suppressed. The illegitimacy
aspect of the bond story was a lie to permit the
story to go away. My sources indicated a Vatican
involvement, in a big cross-border transfer from
lucrative scam role programs. Zurich Switzerland
was the site last week of a major mafia fake bond
bust. Bloomberg broke the story. The Italian
anti-mafia prosecutors seized a record $6 trillion
of allegedly fake USTreasury Bonds, an amount equal
to almost half of the total USGovt public debt.
The bonds were found hidden in crudely constructed
compartments of three safety deposit boxes in Zurich banks, according to the prosecutors.

The police force came from the southern city of
Potenza in Italy,
long dedicated to chasing the mafia dons, and locating
the tainted flawed bonds. The Italian officials
arrested eight people in connection with the probe,
dubbed Operation Vulcanica. The US Embassy in Rome examined the securities, each dated 1934, each bearing nominal
value $1 billion. The bizarre aspect of the story
is that those in possession of the imperfect legacy
bonds were planned for use to purchase plutonium
from Nigerian sources. Bogus US securities have
been seized in Italy
in the past, including at least three cases in 2009.
Italian police seized phony USTreasury Bonds with
face value $116 billion in August 2009 and $134
billion in June 2009. Such cases are not rare, but
the quantity in Zurich was the largest in history. The US Secret
Service handles 100 cases per year related to bonds
and other counterfeit or forged instruments. See
the Zero Hedge article (CLICK HERE)
and the Business Week article (CLICK HERE).

A savvy colleague pitched in for a better interpretation
of the event unfolded, providing a light of historical
reality. He wrote, "Of course the bonds
are not fake in the trivial sense. They were intentionally
flawed and used to dupe the Asian Dragon Families
decades ago into giving up their metals with the
idea they would never be redeemable. The flawed
bonds must have fallen into low level criminal hands
with the passing years, redeemed at progressively
lower value on basement trades. They might have
value as collateral even if they cannot be cashed."
My conclusion is simpler. Back in 1934, if the entire
USEconomy had a Gross Domestic Product more than
a few $billion, it would be shock. If the entire
USDollar circulation stock was more than a few $billion
back then, it would be a shock. If the entire USGovt
budget was more than several hundred $million back
then, it would be a shock. Therefore, conclude that
legacy bonds are very much counterfeit.

◄$$$ THE OLDEST BANK IN SWITZERLAND SHUT DOWN. WEGELIN BANKERS ENDED OPERATIONS
AND DISSOLVED. OTHER BIG BANKS ARE CUTTING THEIR
WORK FORCE IN THE NATION, WHERE THEIR BANKING
CENTER IS IMPLODING. THREE
FACTORS CONTINUE TO KILL THE SWISS
BANKING CENTER.
$$$

Wegelin Bankers is a very old Swiss bank. It had
ironically nurtured an anti-US stance in recent
years. It served as haven for funds seeking safe
haven. The Swiss banks no longer want the safe
haven status since it invites the Anglo attacks
in retaliation, and furthermore, the fund influx
drives up the Swiss Franc currency in unwanted manner.
Foreign accounts for Americans are an open book
with full disclosure, a far cry from decades past
when narco money and Selassi money and Marcos money
was welcome. In an unrelated case, a good friend
in Zurich
contacted me last week to inform that his wife lost
her job in a major bank with a big investment arm.
She was one of 29 laid off out of a large group
of 31 workers. The firm is Clariden Leu, an outfit
owned and mismanaged by Credit Suisse. They cut
90% of the FOREX staff even though profitable. By
integrating the bank into their own house, they
will cut 550 employees, enjoy much cost savings,
called striping. The Structured Product Team was
retained. The news took many by shock, since the
histo ry of the bank is solid as a rock.

My view is that the working capital of Credit
Suisse has evaporated, along with working capital
of UBS. The Swiss banking sector is imploding
by all accounts, as the CS and UBS flagships are
both wrecked vessels, stripped of their gold, leasing
gold from allocated accounts, stealing from clients,
and recently defending against class action client
lawsuits. The Swiss banking sector suffers from
three important factors attributed to decline and
loss. The toxic bonds from mortgages have extended
to sovereign bonds. The Eastern European mortgages
are a vast wrecking field. The privacy of accounts
has been shattered, leading to vast account departures
and shutdowns. The first two have led to grand losses
in reserves, while the third has resulted in funds
departing en masse. In general, where the USGovt
leaves its mark from influence, a black hole results.

◄$$$ A LOT OF TALK IN
THE US-FINANCIAL PRESS ABOUT GERMAN MANUFACTURING
PROWESS AND ECONOMIC STRENGTH. THE AMERICANS FIND
IT MYSTIFYING. IT IS SIMPLE. THEY DID NOT OUTSOURCE
TO ASIA. THEY BROUGHT DOWN
LABOR COSTS WITH UNION COOPERATION. IN DOING SO,
THEY RETAINED THEIR WEALTH ENGINES. THEY FORGED
A SUCCESSFUL PARTNERSHIP BETWEEN THE EXECUTIVE AND
LABOR CLASS. $$$

A certain legitimate fascination has come in recent
weeks to the German success story. They have wealth,
savings, industry, and trade surpluses. They earned
their AAA debt rating, whereas the United States coerces its
undeserved longstanding merit badge. My belief
is that the resistance to outsource to Asia,
combined with bringing down labor costs via national
compromises with challenges, these are the major
factors for the success. In the 1990 decade,
a tough series of contracts were made with labor
unions, even with 10% to 15% pay cuts with stubborn
but cooperative German workers. The Central
Europe stronghold nation kept the engines of wealth
at home, did not betray the workers, and let the
economy continue to go to work. The US corporate leaders engage
in constant betrayal, if not open lies, to justify
their devotion to offshore and outsourced solutions.
Response to labor unions and fierce environmentalists
was to depart for Asian shores. A quick story has
Cisco Systems, whose CEO speaks openly about growing
jobs at home. But an employee is a Hat Trick Letter
subscriber, who reported that ten thousand jobs
are being outsourced to Asia.
The German industrial executives stress another
key feature to their economic success. It is education
at the broad table in the university and school
system, coupled with extensive ongoing training
within the corporate walls. This ensures both
innovation and high quality. They set goals and
meet many of them. Germany did not grow its financial
sector out of proportion like the US did, led by
Wall Street asset inflation maestros and their demagoguery
laced with bond fraud. Chronic war and lost industry,
followed by serial asset bubbles and bond fraud,
these factors killed the US
nation. Not so in Germany.
Anyone who has known exchange students in US
high schools coming from Germany
can attest to them being competent, organized, and
intelligent. The Jackass has had the pleasure of
knowing three such German exchange students attending
high school with children of two good friends in
the Boston area.

◄$$$ ALTERNATE PERSPECTIVE ON ENGLAND AND GERMANY ARE WORTH A LOOK. MUCH OPINION HAS BEEN
BANDIED ABOUT CONCERNING INTERNAL CONFLICTS BETWEEN
GERMANY AND FRANCE,
BUT ALSO VERSUS THE OUTSIDER NATION ENGLAND WHOSE LEADER CAMERON HAS ACTED AS A REBEL
AT THE RISK OF ISOLATION. $$$

To be sure, the AAA core in Europe
is shrinking like an eroding island beach. Pressures
are acute for Germany to prop up the EFSF bailout fund alone,
to the point of contingent liabilities endangering
Germany itself. The burning of Athens will prompt Italy to work out deals more palatable to the
public. Portugal
and Spain
are next on the firing line. Watch for a rebirth
of the colorful charismatic Silvio Berlusconi in
a gambit to return to a position of power in Italy. But the real game is
being played in Germany,
where the power lies. Chancellor Merkel is twisting
in the wind with no power base. Many mistakenly
believe she will make a grand display to restore
her power. They are wrong. She will be discarded.

A German banker source provided a perspective on
the European interplay, as well as a revealing glimpse
into England. Clearly an edge is
evident. He wrote, "Many errant analysts
choose to misread the hard cold numbers and ignore
the interdependencies between Germany
and France.
The Germany
standard of living has reverted back to 1983 levels.
Greeks enjoyed an increase in their standard of
living by fully 50% since the Euro introduction,
courtesy of transfer payments from the EuroCB financed
by Germany . Half of French exports go to Germany
and half of German exports go to France.
But a sizeable 85% of the French national debt is
held by the Bundesbank in one form or another, a
fact not well-known. It is time that all these
Club Med deadbeats face the music. Here are some
startling facts about England. Bentley is owned
by VE. Rolls Royce is owned by BMW. Land Rover and
Jaguar are now owned by TATA. All of these companies
make money and are successful now. Without this
influx of finance and technology, the British would
not have the industrial base any longer to manufacture
bicycles or anything else of value added industrial
production. The island is losing their significance
on matters pertaining to the Western European mainland.
The only one of merit still standing in Britain
is HM Queen Elizabeth. In London
they now have Mercedes busses. Sometimes one wonders
what they fought for during WWII."

◄$$$ THE USDOLLAR-BACKED CANADIAN GOVT BOND
IS AN EXERCISE IN ABSURDITY AND COWTOW. FINALLY
CANADA LACKS CASH FLOW DUE TO PAIN HITTING FROM
THE HIGH CANADIAN DOLLAR. $$$

Minister of Finance Jim Flaherty announced that
the Canadian Govt has submitted plans to issue a
US$-denominated global bond in February. The bond
issue will provide funds to supplement and diversify
the country's foreign exchange reserves and to meet
foreign currency requirements. Therefore, funds
will be available to purchase the elevated bubbly
USTreasury Bonds, as part of a backdoor Global QE
program. The commodity rich nation is in possession
of bountiful minerals and resources. It already
has flow of FOREX funds. Perhaps this policy move
is a response to the encroachment of significant
Chinese contracts for commodities ranging from metals
to energy to agricultural products. They might no
longer make payment in USDollars, thus creating
a sudden vaccum in Canada.
See the Canada Govt Finance article (CLICK HERE).

Another perspective came from a high level consultant
from Toronto.
The lack of US$-based cash flow appears to be the
direct economic impact of two years near parity.
He said, "As long as the Canadian Dollar
was at 0.75 to 0.80 versus the US$, Canada could camouflage its inefficiencies, especially
from productivity slack. With the currency near
parity with the Canadian Dollar, the secondary industries
in Quebec and Ontario
are being systematically wiped out. Also US
movie productions in Toronto have come to a grinding halt since there
is no cost advantage any longer. Canada and the US have a daily trade volume of around $8 billion
going both ways. That trade will shrink by 50% over
the next 24 to 36 months. Flaherty is an lowlife
reprobate, an opportunist who sacrifices everything
on the altar of opportunity. Canada will eventually
recover much quicker than the United States, since
the introduction of a commodity backed money system
in Canada will be an easy process."

◄$$$ A GROTESQUE ANOMALY ON FEBRUARY 13TH
DISPLAYED IN FULL VIEW THE ILLICIT ARBITRAGE IN
THE CRUDE OIL MARKET. THE U.S.O. EXCHANGE TRADED
FUND IS TIED IN CORRUPT FASHION TO RIG THE CRUDE
OIL PRICE. THE MARKET SHUT DOWN FOR ONE HOUR, WITH
NO EXPLANATION OFFERED. JUST ANOTHER ETFUND TO RIG
A MAJOR COMMODITY PRICE. EVERY US-BASED MARKET IS
BROKEN, CORRUPTED, AND A CONTROLLED PLAYGROUND.
$$$

Monday February 13th, the honest watchers patrolling
the crude oil market could witness a magnificent
rare event. The crude oil market has been corrupted
for a decade or more. The crush from $140 to $40
in 2009 was a gigantic vivid signal for the corruption,
never properly reported. In no way did demand vanish
or supply reappear to justify the price movement.
The CME crude oil market was halted for over an
hour on the 13th during what seemed like a heart
attack event. An errant trading pattern occurred.
It did not cause a crash. But the irregularity
was stark and revealing of a tethered line between
crude oil and the USO fund that tracks the oil price,
enough for officials to shut down the crude oil
market temporarily. The USO fund was controlling
the crude oil price, not tracking it, and the evidence
was visible in the open. It went offline for a full
75 minutes. An algorithm went berserk for certain.
Some block orders choked the system. The tethered
line to the USO fund went awry, its control box
used to short crude oil with client investor funds.
The quote stuffing went out of control. Notice the
crude oil price has gone over the $100 mark after
many months. If the US$ DX index is making a nice
move up, then the oil price should go down and relax.
The hedging against a broken USDollar is a major
trend. The Boyz have been trying to keep the
oil price under control, and the USO fund is a main
control panel tool. Check out the Nanex visualization
of what occurred in those seconds between 13:59:57
and 14:04:55 when "a blast of quotes corrupted
a memory queue causing the software to believe the
queue was full all the time." Those are
the official market words. Back in May 2010 the
fabled flash crash hit several markets simultaneously.
This time another rogue algorithm hit. Do not expect
the incident to be brought under review, or for
any precautionary action to be taken. No need to
label the market as corrupt and in need of examination.

Tyler Durden offered the following account. "On
February 13, 2012 starting 13:59:57, quotes for
crude oil began queuing. At 14:00:35, all of the
queued quotes were sent at once. Again at 14:01:08,
the same 38 second block of quotes sent earlier
was sent again, old timestamps and all plus a few
new quotes. Again at 14:01:18, all quotes since
13:59:57 were sent again. This repeated 12 times.
From a programmers perspective, it looks like a
system problem caused a blast of quotes that corrupted
a memory queue, causing the software to believe
the queue was full all the time. Tick chart of bid
prices (red) along with quote age (blue). Note that
as the cycle repeats, it includes a few more quotes
(the new quotes + those since 13:59:57). There are
500 quotes between time axis labels. The 500 millisecond
chart of ETF US Oil Fund (USO) showing massive quote
traffic as it reacts to stale futures quotes."
See the Zero Hedge article (CLICK HERE).
Some might argue of no proof for USO controls evident.
The entire incident could not have occurred without
the control linkage. If the USO exchange traded
fund truly tracked the crude oil market, then the
USO would have simply shut down and gone quietly.
It too reflected the cardiac fibrillation. See the
quotes in blue and bids in red.

◄$$$ FOR UNITED STATES, THE PATH TO THE THIRD
WORLD NATION IS PAVED ON A ROAD THAT HAS BEEN STRIPPED
OF INDUSTRY. THE TREND CONTINUES TO REMOVE AND DISMANTLE
INDUSTRY. THE UNITED STATES IS THE LEAST INDUSTRIALIZED
AMONG THE MAJOR LEADING NATIONS. WITH THE GLOBALIZATION
MOVEMENT, THE U.S. TRADED DEBT DEPENDENCE TIED TO ASSETS FOR
ITS INCOME GENERATORS SENT TO ASIA.
THE RECKLESS MOVE LOWERED COSTS BUT RUINED THE NATIONAL
FINANCES. THE CLEAN INDUSTRY OF FINANCE TURNED DESTRUCTIVE.
$$$

The Third World is guaranteed for the United States, not even in
debate. Rigged elections and rampant fraud are bitter
fruits from the trees grown wild in recent years.
Heightened monetary inflation will keep the finances
going for a while, until the consequences enter.
The American Tragedy is built upon lost industry,
steadfast devotion to war, devotion to asset bubbles,
permitted fraud, central bank errant ideology, and
abysmal economic guidance. But the foremost
factors in my view are the Vietnam War, the heavy
cost, the inflation impact, the rising wages, the
built-in cost of living adjustments, then the resulting
lost industry from seeking out lower cost outsources.
They were easy to find in Asia.
Few economists connect the heavy war cost to the
USEconomy in gutting its domestic industry. The
environmental movement offered cloud cover for the
migration, or dismantlement. Clean industry turned
out to be basic asset inflation dependence and bond
security paper shuffling, laced with profound fraud.
The bust has been in place with painful effects
for four to five years, with no end in sight.

The following data details about the de-industrialization
of America
is shocking, hardly new to astute observers but
nevertheless worthy of mention. Steel, cars, and
electronics are the main thrust, all being lost.
The dangerous wrecking ball trend is that the consumption
accounts for 70% of the USEconomy, while legitimate
income from factories has dwindled. The direction
is toward China for that income base.
The source of American consumer funding has increasingly
come from inflating assets and debt. The USEconomy
has lost 42,400 factories since 2001, whose average
factory worker count was typically over 500 people.
More recently, the US
has lost 32% of its manufacturing jobs, over 5.5
million workers since October 2000. In 1959, manufacturing
represented 28% of US economic output. In 2008, it represented 11.5%
only, and by the end of 2009, under 12 million Americans
worked in manufacturing, a level equal to 1941.

Ford Motor Company recently announced the shutdown
of a Ford Ranger small truck plant in Minnesota,
where 750 good paying jobs will be lost. Dell
Computer will expand its Chinese operations with
a massive investment of over $100 billion in the
next decade. Dell will close its last large
US
manufacturing facility in North
Carolina in November, booting down 900 jobs. Printed
electronic circuit boards are used in myriad different
products. Asia now produces
84% of them worldwide. In 2008, 1.2 billion cell
phones were sold worldwide, with zero produced inside
the United States. According to Tax Notes, between
1999 and 2008 employment at the foreign affiliates
of US parent corporations increased
an astounding 30% to 10.1 million, aided by tax
benefits put through by the USCongress. During
that exact same time period, the US job count at American multi-national
corporations declined 8% to 21.1 million. See the
effect in the last 25 years in net worth. While
not a class distinction, it is an age distinction
that reveals an obstacle to young families in climbing
up through the tattered middle class. The payback
for college education has diminished also. In the
last decade, no gains have come in income to college
graduates while educational costs have risen 24%.
See the MyBudget360 article for more information
on climbing the class ladder (CLICK HERE).

The Economic Policy Institute estimates that the
USEconomy will lose over half a million jobs in
the current 2012 year alone. The US trade deficit with China has risen 18% compared to the same time
period a year ago, still rising in trend. The United States spends approximately $3.90 on Chinese
goods for every $1.00 that the Chinese spend on
goods from the United States. On one hand
the US does not produce much, but the Chinese are
the world's most prodigious thieves of intellectual
property related to movies, books, music, and software.
In 2001, the United
States ranked fourth in the
world in per capita broadband Internet use. in 2012,
the nation ranks 15th. That level is converging
with educational proficiency in schools among leading
nations. The US Census Bureau estimates that 43.6
million Americans are living in poverty, the highest
number on record. The flight of industry goes hand
in hand with the rise in poverty, something the
national leaders cannot comprehend.

Recall that China
was granted Most Favored Nation status in 1999,
the motives for which must be questioned. In my
view, it had to do with breaking the global power
structure, and as part of a complex hidden contract
to lease the Mao Tse Tung era gold hoard by Wall
Street. The economic treason of the banker elite
in the United States is astonishing.
They refused to return the Chinese gold bullion
under lease, earning their deep anger. Retribution
follows, the enemy made. The morality of the United
States has eroded significantly
in the last 15 to 20 years, as part of the Fascist
Business Model emerging. Notice the rise of the
financial sector since the Clinton Admin, the rise
of bond fraud, the rise of endless war, and the
climax of skyrocketing USGovt deficits. It is all
inter-related. But the underlying cause is de-industrialization,
with major symptom lost income.

Amidst the many changes toward Third World status
in the United
States, notice the many trend
changes in life and business. The post office is
giving way to insolvency, as couriers dominate and
email expands. The personal check will be next to
fade slowly away, as online banking and even cell
phone access to bank accounts grows. The newspaper
is an artifact that the younger generation has no
use for anymore. The online sources again flourish.
The published book is slowly becoming an expensive
dinosaur, what with online segments and Kindle devices
flourishing. The landline telephone will be a fixture
for corporations and not much more before long,
as cellphones dominate and inter-cel features are
made cheap. The music industry is dying a slow death,
not only from pirated online downloads but from
record label self-destruction. Over 40% of music
sales are from older catalogues. The television
networks are fading away gradually, as cable takes
over and computer downloads take root like with
NetFlix. Ownership of stuff is giving way to using
and renting items on the Cloud. The applications
(like word processing and spreadsheet applets) are
prevalent in shareware. The storage facilities in
Cloud Servers have become popular, as Amazon has
thrived in developing this business segment. Welcome
to the virtual world. But the most destructive trend
is that of the removal and forfeit of industry in
America,
thought by the arrogant financial sector to be dirty
factories. The rust belt has become a badge of economic
policy failure. See Germany for a success story in the same avenue.

◄$$$ THE NEW USGOVT TAX PROPOSALS AGAIN ARE
PUNITIVE AND DAMAGING. APART FROM THE ARGUMENT THAT
SPENDING IS ABSURDLY HIGH AND SUPPORTS A VAST SOCIAL
SAFETY NET AND A GRAND ENDLESS WAR, THE TAXES RENDER
HARM. THE WRECKAGE PROCESS CONTINUES. $$$

On page 73 of the Green Book pertaining to the
USDept Treasury, the benefit for the tax proposals
is stated as $584 billion, when the Congressional
Budget Office estimated it at only $293 billion.
Taxes would be levied on a new category of taxable
income, including the municipal bond income, contributions
to 401k retirement plans (like IRA & Keough),
and the entire health insurance premium regardless
of who pays it. The only good part is the tax rate
applied for these incremental punitive taxes will
be calculatd as the top statutory tax rate minus
28%. For example, a taxpayer subject to a top statutory
rate of 35% would pay a 7% tax on this income, the
difference. So municipal bond investment supply
will go down, harming state finances. So retirement
funds will go down, thanks to the USGovt tap. So
health insurance costs will rise from the tax back
door, leaving less for basic household essentials.
This is not progress. These measures will assure
the USEconomic recession worsens by tightening the
noose a little more. Observe the American austerity
poison pill. See the Zero Hedge article (CLICK HERE).

CHINESE SHADOW ON THE UNITED STATES

◄$$$ THE CHINA PERSPECTIVE IS STILL SHROUDED IN MYSTERY.
CHINA
IS AWAKENING, BUT THE NATION SEEMS FRAGILE IN ITS
RECENT REBIRTH. GREAT STRESSES EXIST, BUT GREAT
WEALTH FUNDS CAN SUSTAIN IT. THE MAKEUP OF ASIA WILL BECOME VERY IMPORTANT IN FUTURE TRENDS. THE WESTERN FINANCIAL
STRUCTURES ARE CRUMBLING. IN THEIR PLACE WILL BE
BARTER SYSTEMS WITH ASIAN PARTNERS IN THE FOREFRONT.
$$$

China will continue to be an enigma wrapped in
a puzzle. But with the added perspective of a veteran
global consultant, some light can be shed on the
emerging giant nation. Jesse of Cafe Americain provided
a preface by saying "China is still the product of the US financiers and would struggle
to stand without their indulgence. But that could
change if China is willing and able
to internalize consumption and create a middle class.
They fear their people, which is a serious obstacle."
The communist party leaders have strived to build
factories and to provide an expanding labor market
in order to enable some prosperity to develop in
China. Their efforts have succeeded to some degree,
but they hitched their fortunes to the USDollar
branded wagon. A rising Yuan currency threatens
the progress to date, as it breaks away from the
defective wagon. As marginal businesses shut down
with a stronger Yuan valuation, workers are increasingly
without work since export prices rise. Such is the
internal stress in China.
To be sure, vast problems in real estate, financial
markets, and pollution exist, even water supply
for Beijing.

A global consultant from Europe has had ample experience
with China
and their trade practices. He offered a unique unexpected
quick assessment in response to Jesse. He has several
high ranking contacts in China involved with setting
up trade distribution channels and making business
purchases. He wrote, "Jesse makes a correct
assessment. China
needs to create internal consumption to sustain
its industries. To do that, disposable income needs
to be created within China, which means allowing
an upper lower class, a lower middle calls, and
a a middle class to develop, which will start consuming
large parts of the Chinese industrial output. However,
this creates a dilemma for the current political
system since it will not be able to deal with such
a development and its political consequences. Asia is ruled by eight Chinese families. The entire Beijing elite is part of that family pool. Some
have assumed other names to disguise their true
lineage. The Chinese are between a rock and a
hard place. I am confident that they will eventually
find a solution for their country. That solution
will not be anything close to what the West might
think it should be. As more time passes the West
will disintegrate and eventually collapse onto itself.
The pendulum is swinging back towards the East.
The nations of China and India,
together with Africa, make
up the majority of the global population. Combined
they have the brains and the markets. It is not
about the fiat money system any longer. Its about
a new, commodity based money system and sophisticated
barter. The banks as we know them are becoming
obsolete. They will be reduced to a role of a utility
that provided a transmission and transfer service,
but that is about it. It is like the little Indian
boy with his little stick commanding and elephant.
If the elephant elects to shake the boy with the
stick, it is game over."

Note the sheer size of Africa,
where entire large nations are but a fraction of
its size. Africa is a primary overtly stated target
of China
for development of commodity supply channels. China must lock in supply chains to nourish its
growing economy. Africa is a secondary secretive
target of the United States for development
of smuggled minerals of various type, thus earning
a price discount. The US
is exploiting the Dark Continent
for syndicate profit and security agency enrichment.
Africa is the current battleground
for minerals and the trade, often the smuggling
trade. Actual bloody battles with soldiers being
killed is happening here and now in Africa over the control of the trade. The United States and China
find themselves on opposite sides, with locals like
Congo in the middle. The USGovt is knee-deep with
the illegal Congolese gold trade. If war breaks
out between China and the US, it will be triggered on the African continent.

◄$$$ US GOVERNORS WENT TO CHINA TO DEVELOP BUSINESS
TIES. BACK HOME FREE TRADE ZONES ARE TO SPRING INTO
LIFE FOR CHINESE BUSINESS VENTURES. ON UNIVERSITY
CAMPUSES, IN-STATE STUDENTS ARE MOVING INTO SECOND
CLASS STATUS BEHIND PAYING CHINESE STUDENTS. $$$

Governors from Washington,
Georgia,
Hawaii, North
Carolina, and protectorate islands met in Beijing
last week to participate in the second China-US
Governors Forum. It is organized by the US National
Governors Assn and the Chinese Peoples Assn for
Friendship with Foreign Countries. The focus of
the gathering was on economic development and job
creation, done through strong bilateral relationships.
They will strive toward a more predictable market
environment where access to capital is strong, workforces
are skilled and educated, while regulatory and business
processes are transparent. The governors will strive
to develop the US export firms. On the other
side of the fence is establishment of free trade
zones. Over 250 official Free Trade Zones are
being planned and constructed, the first in Idaho. They will strangely have legal status
as foreign soil, where executives and workers will
ply their trade. Tax breaks on corporate levies
and export fees will be removed to encourage the
trade.

On university campuses within California, the new trend is for smaller enrollments of in-state students
and greater influx of foreign students, in particular
Chinese. They have the money to pay for tuition.
High test scores matter little in a time of stressed
finances for the state, when considering local student
applications for admission. The University of California system has reacted
to budget cuts by enrolling record numbers of out-of-state
and international students, who pay twice the tuition
as in-state residents. Squeezed out are many
Asian-Americans with strong achievement. The Asian
quota is tilted toward foreign Asians. In 2009,
the University of California
at San Diego will reduce its number of in-state freshmen by 500 to about
3400 and fill the spots by the higher paying students.
As a result, almost 200 freshmen from China enrolled in 2011, up from 16 in 2009, a
12-fold increase. At the same time, the number of
Californians enrolled of Asian-American descent
fell 29% to 1230 since 2009. Americans are fast
becoming second class citizens in their own states,
due to fiscal ruin. See the China Daily article
(CLICK HERE)
and the Daily Paul article (CLICK HERE)
and the Bloomberg article (CLICK HERE).

DOMESTIC SCREWS TURN

◄$$$ ROMNEY HAS THE BIG BANKS ALIGNED IN
A CONDUIT. IF VICTORIOUS HE WILL PROBABLY HAVE ANOTHER
GOLDMAN SACHS CAPTAIN AT THE USTREASURY POST. WITH
OBAMA POPULARITY FADING, THE SYSTEM MIGHT BE BACKING
A NEW HORSE. $$$

The Obama Admin might be eating leftovers at the
banker banquet, compared to four years ago. Compare
the Romney donation support by the Wall Street banking
community in 2011, stronger than those of Obama
in 2008. One might conclude that Romney would perpetuate
the Goldman Sachs dominance at the USDept Treasury,
my steadfast signal for continued corruption and
control. Notice the stern talk by Romney lately
about maintaining such a strong national defense
that no nation would dare challenge the United States. He is openly courting the entrenched
power structure. He might not realize the risk lies
within the internal master offices. The NeoCon Santorum
is surging, whose rhetoric is almost as aggressive
as George W Bush. The Syndicate is grooming its
horses. Remember, the anomalies in the vote counting
are so egregious, with discrepancies from recent
polls and mismatches from exit polls, that my firm
belief is that it matters not how people vote. The
foreign consulting firm El-Con enlisted to do the
official vote count probably has the outcome already
determined, in a close exciting race that captivates
attention. The Powerz will not permit Diebold machine
scrutiny and challenges this time. Too much is
at stake, with profitable wars to protect and bold
financial fraud to defend against, if not control
of the USDollar machinery itself. In fact, it
is illegal to challenge the vote count nowadays,
an unimaginable factor in a leading so-called democracy.
Who counts the votes controls the outcome. Enough
said, since beyond the scope of this report.

◄$$$ SECURITY MATTERS HAVE BECOME CONFUSING
WITH THE MANY UNCLEAR ATTACKS. THE ALLEGIANCE OF
THE SOURCE FOR VIOLENCE IS NOT SO CLEAR. THE RECENT
INTERNET CENSORSHIP BILL MIGHT SERVE AS A MILESTONE
EVENT WITH BROAD IMPLICATIONS. LOOK FOR IMPORTANT
BACKFIRE EVENTS THAT DELIVER SERIOUS BLOWS TO THE
POWERZ WHO WISH TO INSTALL A TOTALITARIAN POLICE
STATE. $$$

When the US Defense contractors were hacked last
year, my ears noticed it as a significant event.
To be sure, the Sandia Labs under the second Clinton
Admin marked a seminal point as the Chinese snatched
some important weapons systems right off the poorly
secured website. When the defense contractors were
hit last year, it seemed the Boyz (aka CIA) might
have been involved to exploit the original breach,
to expose the problem to the mainstream and legislative
process, to cause some significant damage, in order
to prompt legal action for broad controls. But with
controls come censorship and pushing the channels
toward website registration into the corporate mainstream.
Imagine not $32 for annual registration of a website
name, but $2000 or more. One could conclude the
hacks would continue in order to aid the Internet
Control Project known as Stop Online Piracy Act.
Two separate legal issues are at issue, the raids
of intellectual property such as books, music, and
software, even patents. The other side is censorship
itself, the active removal of content deemed unsavory,
offensive, or critically on the mark. Banning websites
has nothing to do with online piracy. So watch the
scope grow in the bill as it hatches. Refer to internet
journals that feature regular stories about USGovt
corruption, Wall Street fraud, legislative collusion,
agency involvement in narcotics, environmental violations,
and regulatory coverups during absent prosecutions.

Other significant events have been WikiLeaks of
questionable type. Lately Anonymous has pitched
in some powerful messages. It is unclear whether
major factors are indeed run by White Hats or Bad
Boyz wearing favorably colored hats in a deception
to further a hidden agenda. The Tea Party has been
totally coopted in my view. To be sure, it contains
some tough minded politicians who refuse to yield
on budget tightening, but over 90% of them voted
to continue the extreme powers of Homeland Security
in an exercise to tighten security at the expense
of liberty. This was a major copout. The Tea Party
has lost its original plank of zooming in on Wall
Street bond fraud and its engrained corruption in
two USGovt branches. Once in the USCongress, its
members receive the gravy from the bank sector in
donations, thus silence in control, or perhaps threats
to avoid obstruction. A big backfire against the
Empire seems underway outside the US defended walls. Iran
is the major turning point. Keep in mind that Iran
committed the similar sins of Iraq,
but the rogue nation has gathered allies against
the Empire in non-US$ usage within the all important
crude oil industry. Backfires might actually come
against the Internet control movement, or to the
Gold confiscation initiative (liquidation forced)
in the coming months, akin to the Iran backfire. The elite goal of a totalitarian
police state is aided by banking system breakdown,
by sovereign bond breakdown, and by economic breakdown.
They appoint saviors called technocrats to repair
the mess supposedly, but they are mere unelected
Syndicate dons.

The next ugly chapter seems hellbent on the Stop
Online Piracy Act, designed to take control of the
Internet, but disguised to protect intellectual
property. A sage global consultant with strong ties
to certain Western but non-US security organizations
made a comment. He knows what he is talking about,
a veteran in two decades of high stakes security
battlegrounds. He said, "Anonymous is like
Al Qaeda, an invention of and run by the Langley
Boyz at the CIA. Most of the people working with
the Anonymous organization do not know whom they
serve. However, this one could very well backfire
for the Boyz big time."

Let it be known that Facebook has sold out to the
Syndicate. Recall the Goldman Sachs investment last
year, their calling card for control. Billionaire
status has its price. Numerous Facebook invitations
come to the Jackass, but when investigated, the
people usually did not send them. The USGovt agencies
have coopted it, using the social network to track
and monitor people of interest. My policy is to
refuse all invitations without thought. All online
commercial transactions are also coopted since the
old flagship Motorola chips went away and the Pentium
chips took the dominant role. The newer chips have
a backdoor for agency monitors. All innovative technology
is coopted. Notice that Blackberry had some severe
technical glitches last year, a direct response
to their refusal to be coopted. They command unique
leading edge telecom technology. They will stumble
until their value is so low that they will sell
out.

◄$$$ THE NEW YORK TIMES HAS PUBLISHED AN
ARTICLE WRITTEN BY F.B.I. OFFICIALS TO THE EFFECT
THAT GOLD OWNERSHIP AND CRITICISM OF THE USDOLLAR
IN WEAK POSITION AS GLOBAL RESERVE CURRENCY COME
FROM FINANCIAL TERRORISTS AND EXTREMISTS HARMFUL
TO THE NATION. THEY ADDRESS MANY LEGITIMATE THEMES
LIKE DISSENT AIMED AT POLICE OFFICERS AND TAX COLLECTORS
(NOT BANKERS) DURING A TOUGH TIME FROM FEDERAL RENEGADES,
RESULTING IN VIOLENCE. $$$

The FBI has gone public with warnings that extremists
pose a security threat. Anti-USGovt extremists opposed
to taxes and regulations pose a growing threat to
local law enforcement officers in the United States, the FBI warned.
These extremists, sometimes known as sovereign citizens,
believe they can live outside of government authority.
The extremists may refuse to pay taxes, defy
government environmental regulations, and believe
the United
States went bankrupt by going
off the Gold Standard. Numerous incidents has
occurred, where seemingly routine encounters with
police have turned violent. Many police officers
have been killed or injured, like when sovereign
citizens were pulled over in traffic stops. Such
incidents are deviant to the extreme and serve no
useful purpose except anarchy. On the rise are white
collar crime convictions of such defiant citizens.
The FBI complains of being swamped by requests for
training from state and local law enforcement on
sovereign-related matters. JJ MacNab is a former
tax and insurance expert working an analyst of the
sovereign movement. He estimated the movement has
100,000 members, who express outrage at tax collection,
federal reach, banker fraud, and war stance. See
the Reuters article (CLICK HERE).
Such violence is aberrant and destructive. However,
the FBI has gone further in declaring the movement
against the USDollar, in favor of Gold and a Gold
Standard, in opposition generally against the USGovt
financial helm, as being terrorist in nature. This
label is extremely disturbing and dangerous. If
deep criminality hides behind the US Flag, it must
be rooted out.

◄$$$ NEW MORE STRICT CAPITAL FLOW REPORTING
REQUIREMENTS ARE SOON TO KICK IN. BANKS WILL BE
REQUIRED TO REPORT LOWER AMOUNTS IN MOVEMENT. THE
RULE WILL APPLY TO THE GROUND LEVEL ACTIVITY IN
PICAYUNE VOLUME. $$$

A source with USDept Treasury information access
has informed that starting in a couple months (unsure
of exact time), the $10 thousand lower limit will
change to $2500. Banks that move over $10k must
report the transactions to the USGovt. That amount
is to be cut by a factor of four soon. Furthermore,
on basic MoneyGram or Western
Union small wire transfers, the limit of transfers
will be imposed at $250. The limits will come way
down, causing an uproar. The new directive will
render inconvenience or harm to poor families sending
cash back home, like immigrant workers. The clamps
are coming down hard. Regard these changes as capital
control methods, forewarned by the Jackass for the
last three to five years. They are arriving in ugly
glory.

◄$$$ INCREDIBLY, PIMCO IS BEING REVIEWED
FOR WHETHER IT IS FORMALLY TO BE DECLARED A SYSTEMICALLY
IMPORTANT FINANCIAL INSTITUTION, SUBJECT TO HIGHER
OVERSIGHT. IT HAS GROWN TOO BIG. THE NET IS FALLING
ON THE PRIVATE INVESTMENT SECTOR. THE WALL STREET CONTROL APPARATUS IS SPREADING ITS TENTACLES. $$$

It seems the Pacific Investment Mgmt Corp has grown
so big that it endangers the USTreasury Bond. What
might soon follow is mortgage regulatory oversight,
perhaps inclusion of USDept Treasury officers on
PIMCO strategic decision teams. The concern is
that the giant manages so much money for pension
funds that it could render deep damage to the USEconomy
if it ever suffered a failure. The firm has
doubled in size to $1.36 trillion in assets since
the collapse of Lehman Brothers in 2008. Furthermore,
decisions to abandon the USTBond under control could
send bond yields higher, rendering other damage.
The veil appears to be in the making to justify
placing controls on PIMCO since it could abandon
USTBonds and USAgency Mortgage Bonds and inflict
great damage, even harm national security. Its
flagship fund relies heavily on derivatives to place
risk insurance against bonds. The fund's size and
scope have become so unwieldy as to possibly be
unmanageable. If a trading party should fail, some
ripple effects could come. Bear in mind that a year
ago, Bill Gross disliked USTBonds due to the rising
USGovt deficits. Maybe he did not appreciate the
corruption laced throughout the top tiers, or the
basic abuse of leverage devices like the Interest
Rate Swap contract to keep bond yields under control.
He might be seen as a renegade who requires a lassoo.

Also the Goldman Sachs lieutenant Neil Kashkari
came to serve as head of global equities in December
2009, a move that seemed odd since he had no great
experience in such investment circles except for
being in charge of Goldman's Information Technology
Security Investment Banking, advising public and
private companies on mergers and acquisitions and
financial transactions. That post seems more like
an apprenticeship before moving directly to a director
post of a premier fund firm. The bond giant PIMCO
decided three years ago to build an active equity
management business from nothing. Kashkari did earn
his syndicate stripes when he served on the TARP
team, officially the Interim Assistant Secretary
of the Treasury for Financial Stability. That was
a colossal fraud and effective distraction. It seems
that he has been installed within PIMCO to serve
as eyes and ears, but with an official substantial
role to serve. Kashkari comes from the Chicago
connection, like Rahm Emanuel who still leads in
the White House visit list indicator despite no
longer serving an official function. Rahm still
serves as liaison to the command center from afar.
See the Reuters article (CLICK HERE)
and the Business Insider article (CLICK HERE).
One should bear in mind that the Wall Street syndicate
would savor the opportunity to control all large
financial firms in the private sector. Anyone who
regards that as a positive development is braindead
with a blind spot in the Fascist Business Model
entirely. Rather, anyone who holds integrity and
fairness in high regard would oppose spreading the
Wall Street control apparatus.

FINANCIAL FRAUD GONE WILD

◄$$$ LAX PROSECUTION GOES HAND IN HAND WITH
THE FASCIST BUSINESS MODEL. THE CRIMINALS ARE THE
USGOVT PARTNERS, IF NOT MASTERS WHO RUN THE AGENCIES
DIRECTLY OR THROUGH THEIR HAND-PICKED LACKEYS. AS
CRIME IS THEIR MAIN MEAL TICKET, IT IS PERMITTED,
ENCOURAGED, ORGANIZED, PROTECTED, AND HARDLY EVER
PROSECUTED. $$$

Almost all prosecutions of heavy fraud in the financial
sector has been of people outside Wall Street. See
WorldCom, Health South, and others. The goal is
to give the appearance of fighting crime, but to
protect the criminal fortress where the power lies.
The higher profile cases focus on patsies and irrelevant
side shows. A patsy is the UBS rogue trader. A side
show is the Galleon case out of Connecticut.
In the last twenty years, the prosecutions have
dwindled in number. The volume of bond fraud is
at least $2 trillion with numerous Wall Street firms
involved. Search deeper to find at least $4
trillion in bond fraud. Barry Ritholtz calls the
current investment bank arena a target rich environment.
Bank fraud prosecutions seem like a dodo bird going
into extinction. Either those in charge are Keystone
Cops wading in vast incompetence, or they are part
of the criminal latticework turning a blind eye.
My firm belief is the latter, of deep culpability.
During George W Bush Admin, which Ritholtz calls
a reign of error, the USDept Justice looked the
other way at rampant diverse fraud, but most especially
securities fraud on Wall Street. During his presidency,
the cases plummeted 87%. Some called it a curious
incompetence.

The Obama Admin is even more unwilling to prosecute
high financial crimes, which would probably bring
down the system. That is because the power center
for the USGovt itself lies in the big banks responsible
for the fraud. The Obama cops are no better when
it comes to corporate, securities, and bank fraud
than the predecessor. Prosecutions of these three
categories of crime are best linked to the causes
of the broad deep lingering crisis that plague the
United
States and make recovery absolutely
impossible. The Too Big To Fail bank mantra is part
of the entrenched problem. These banks are criminal
organizations worthy of RICO prosecution. Such cases
declined last fiscal year 2010 by 39% from 2003,
the period long after some popularized accounting
scandals. Enron was a JPMorgan and Citigroup creation
with patsy Arthur Anderson taking the fall, the
brains being lent by Harvard
University.

The US
Attorney General has not simply dropped the ball.
The office has decided not to carry it at all. Conveniently,
or with clear motive, following the 911 events,
many FBI agents were reassigned to anti-terrorism
projects. Given that function was under a different
budget, the USDept Justice should have demanded
more fraud investigators with forensic skills. The
911 card is too easy, actually a rather lame excuse
for successful fraud prosecutions having dried up.
Ritholtz identifies three obstacles for fraud
prosecution. 1) Failure to attack the problem
as a systemic issue rather than isolated cases,
with the RICO weapon used the organized nature of
the fraud and vast profits. 2) Conflict of interests
from the still enormous stakes the USGovt has in
banks and insurers. The incentives to find malfeasance
is undercut, since convictions would harm the taxpayer
funded portfolio. 3) Lobbying and campaign donations
from financial firms would vanish. The USCongress
is often fingered as a wholly owned subsidiary of
Wall Street. Increased pressure has come from Congressional
members on the Justice officials not to bring legal
action. He concludes the best hope for obtaining
any form of post-crisis justice will come from the
State Attorneys Generals. See the Ritholtz article
(CLICK HERE)
and the YouTube video of New York AG Eric Schneiderman
on mortgage investigations (CLICK HERE).
Irony is evident. If a RICO prosecution was successful
and vast assets were seized, they would be placed
under USGovt ownership, but the control would remain
with the Syndicate in violation, since they control
the USGovt. The assets would merely change closets
in the same infested house. Ugh!

The volume and type of fraud cases would require
1000 pages to enumerate and elaborate. The latest
gigantic crime is the absent payouts on Credit Default
Swaps from European sovereign bonds after their
valuation whacks, a clear default that has avoided
awards by pure force levied upon the investors.
The cohort complicit banks in the grand government
bivouac, again the mainstay of the Fascist Business
Model, complain little since they receive so much
above board and below board aid. The hedge funds
are the angry betrayed parties, who might someday
have their day in court since often excluded from
accords struck. The result is ruined system
integrity on debt insurance fraud. The Obama Admin
has a particularly stained USDept Justice under
Eric Holder. He is so dirty that laundry cycles
could spin to eternity without a cleansing. Each
successive Justice team seems more devoted to crime
than the previous. Holder has some fingers pointing
at him for bribery to avoid USGovt prosecution.
The Fast & Furious weapon sales to Mexican drug
lords should have resulted in his dismissal, if
not prosecution for sedition. See the Daily Caller
article (CLICK HERE).

See the Jackass public article entitled "Corruption
in Fascist Business Model" for a descriptive
outline of the climax of corruption within the partnership
model that covers several important pieces on the
chess board. They seem to move together. The vast
bond fraud is permitted, encouraged, planned, and
executed with the direct cover of USGovt agency
and regulator protection. See the Goldman Sachs
insider trading UNIX box on flash trades, where
the FBI confiscated the software and made certain
the evidence was not published. The stories are
truly endless. Best to view the Justice track record
from afar to see the inaction, rather than ineffectiveness.

◄$$$ ANN BARNHARDT CALLS IT 'GAME OVER' ON
FINANCIAL MARKET LEGITIMACY AGAIN. THE DERIVATIVES
CONTRACTS WILL BE DISHONORED. THEY ARE A ONE-WAY
STREET OF REVENUE GATHERED WITHOUT AWARD PAID OUT
ON SUPPOSED BOND DEFAULT INSURANCE. ONCE MORE THE
TOO BIG TO FAIL PRINCIPLE IS AT WORK, BUT NOT MENTIONED
SINCE THE INSURANCE FRAUD IS SO OBVIOUS. THE BIG
BANKS LIKE GOLDMAN SACHS AND JPMORGAN COLLECTED
$TRILLIONS IN CDSWAP CONTRACT PREMIUM AND WILL AVOID
ALL INSURANCE PAYOUTS SINCE THEY CONTROL THE REGULATORY
BODY. $$$

Ann Barnhardt continues her tirade, providing good
perspective on the rapidly deteriorating situation
of US financial system integrity.
As preface, the ISDA is on the verge of justifying
once again why a 70% accepted bond loss on Greek
Govt Bonds does not qualify as a bond default to
its investors, or to its bond insurance contract
holders. She calls it Game Over again with strong
arguments and clear contract definitions in rough
terms. Incredibly, the top 5 banks account for 99.99%
of the roughly $300 trillion in underwriting for
US OTC derivatives. They have built a one-way revenue
stream which finally has received the spotlight
of scrutiny. Here are her main points.

Integrity within the system is vanishing, spelling
the end of big US
banks and the financial system. The Credit Default
Swaps (CDS) are insurance policies that investors
have traded, very similar to options. Buying a CDS
is essentially like buying a put. The buyer pays
a premium as fee to the writer, the seller of the
CDS. It dictates that the seller will guarantee
and make whole the buyer's position in a specific
bond if the entity behind the bond (such as Greek
Bond) defaults. In exchange for paying the premium
and being made whole after a default, the buyer
of the CDS would surrender the bond position to
the seller of the CDS, and the seller would then
be entitled to keep both the premium paid plus any
salvage value of the defaulted bond. The bond
is thus swapped. The CDS buyer pays a premium fee.
The seller guarantees against a default and takes
swapped ownerhsip of the bonds if a default occurs.
The bond can at that time be salvaged for some minor
financial recovery. That is how it works.

Barnhardt suspects the bondholders are going
to take the full brunt of the 70% haircut. The
Intl Swaps & Derivatives Assn (ISDA) is charged
with the decision on whether or not a default has
happened. She expects the ISDA will declare that
this credit event is NOT a default. They might even
hint that payouts would threaten the entire US
financial structure, as in a national security issue.
The raft of banks and financial firms that believed
their European debt positions were hedged with CDS
contracts will find out that they have no protection
at all. Then comes the uncertain backlash. The ISDA
position is strongarm, dictated by bankers on their
regulatory staff, much like with the SEC on stock
fraud cases. The derivative regulatory body has
never been in the news until recently. Their ruling
that a 70% bond haircut is not a default is pure
nonsense and more fraud. Barnhardt points out that
payment of only 30% toward a home mortgage would
immediately result in a default and action to seize
the property, even boot out the resident. The
motive exists to retain 30% on the impaired bonds
in order to make the legalistic argument that a
full default has not occurred. Salvage is indeed
a core concept in CDS contracts. She returns to
the key issue, on which big bank entities wrote
all of these Credit Default Swaps. They will make
off like bandits since they received the hefty premiums
and will never be forced to pay out awards. It is
like denying a home fire insurance claim since only
two rooms were destroyed, and the entire house was
not burned to the ground.

Expect that Goldman Sachs and JPMorgan wrote the
CDSwap contracts in large volume. The MFGlobal crime
scene shows JPM illictly hypothecating and leveraging
the customer funds into European bond positions
hedged with Credit Default Swaps. My theory is that
MFG was the JPMorgan lackey, covering the big bank
exposure in netting to zero the risk. All the large
financial firms are making grabs at the available
customer collateral, an ugly consequence of their
deep insolvency. They are broke, and do not have
the collateral on the important contracts that serve
as structural planks in the broken financial system.
The GSax and JPM banks of the world are happily
gathering $trillions in CDS insurance premiums.
They know Europe will collapse.
They eagerly sell insurance since they control the
ISDA on payouts, never to happen. The ISDA is populated
by their own people, and the ISDA will therefore
never declare a default unless bond valuations fall
to zero. They would therefore pocket the premium
received, but most importantly would then swoop
in and buy up all of the banks and brokerages destroyed
by their unhedged net long-Europe positions.
The crime scene to come will be double barreled,
as the fraud kings will attempt to purchase the
wrecked financial field and all its major players
with the same money that should go to the insured
firms, all to be denied.

The reality regarding the CDSwap contracts extends
from their binary nature. CDS are not like regular
options. Either there is no default, or there is,
and the payout required would be massive, with no
legal middle ground. A partial bond loss is a technical
default, as the debt rating agencies have competently
and boldly declared. No moderate CDS payouts are
part of the insurance contract, since all or nothing.
The CDS outcome is to swap ownership of the bond
for full reinstatement of their insured value. The
size of the CDS market is in the tens of $trillions.
It is a fraud in progress bigger than the housing
bust and mortgage bond debacle. Again, it is Game
Over.

MFGLOBAL COVERUP

◄$$$ THE MF-GLOBAL TOTAL STOLEN WAS PROBABLY
CLOSER TO $105 BILLION, IF THE MOVEMENT OF MONEY
IS ANY INDICATION. THAT IS THE FIGURE OF SUSPICIOUS
MOVEMENT IMMEDIATELY LEADING TO THE DECLARED BANKRUPTCY.
THE STORY IS FINALLY COMING OUT, BUT STILL NOT GIVEN
EMPHASIS OR PROPER LIGHT. $$$

The Trustee to the MFGlobal case cannot be trusted.
Finally after two months more actual relevant data
has emerged. The original $600 million figure of
missing client funds was at one time doubled to
$1.2 billion. Last week the missing figure rose
again to $1.6 billion in a fresh look. The word
is that $700 million is trapped in London, where the Trustee is stuck in the long haul with the British
administrator. The funds are not missing, as people
in London
realize. It lies in the London
accounts of JPMorgan and their collusive partner
banks, according to their newspapers (which US
folks do not read). Apparently the official word
is that MFGlobal did not do a good job at recording
cash movements. They after all were subservient
to their JPMorgan master, and the confusion enabled
large scale commingling of funds, all very illegal.
Confusion is always a handy lever to pull when flushing
a story. According to Bloomberg, the MFGlobal trustee
has announced that MFG had a shortfall in commodity
related clients funds as early as five days prior
to bankruptcy announcement on October 31st. The
Trustee claims that MFGlobal did not always record
cash movements.

The Trustee has traced $105 billion in cash
movement in the days leading up to the bankruptcy.
Also, the MFG executive misled the public directly,
claiming it held $4 billion in cash and $500 million
in excess capital right before it went bust.
Like with the Madoff movie, the cited figures in
estimated theft are one or two orders of magnitude
below the reality. Tens of $billion in improper
cash movement were made in the days leading up to
the MFG filing. That bears repeating. The financial
press and the lapdog Congressional mouthpieces repeat
the $600 million figure like parrots. See the Bloomberg
article (CLICK HERE).
My contention is that more MFG cases will erupt
before long, showing the tangles of hypothecation
and illicit asset grabs to cover the vast inter-network
of collateralization and derivative coverage by
insolvent busted financial organizations. The US
public will not awaken until millions of private
accouns go missing, not just 140 thousand like in
the MFG case.

Brother John provided a great exposure interview
of the lead attorney for the Commodity Customer
Coalition. Warren Pollock interviewed James Koutoulas.
They explored how JPMorgan, former FBI director
Louis Freeh, and the USDept Justice are working
against MFGlobal customers interests and the
pursuit of justice through a transparent and truthful
bankruptcy process. The role of Freeh stinks of
corrupt influence, like a syndicate liaison inserted
to ensure the coverup. The bank syndicate interests
are again protected by the USGovt and its agencies
working in concert. Notice the obstruction and official
ploys. 1) Customers are prevented from discovery,
under the rationalization that there is a meaningful
investigation underway by the USDept Justice. 2)
At the same time Louis Freeh has refused to hand
over information that may indicate fraud and malfeasance
on the part of major players including Jon Corzine,
under the justification that he is protecting the
interests of his client JPMorgan. 3) The USDept
Justice has not prosecuted mortgage securitization
fraud and financial fraud, which contributed directly
to the 2008 financial collapse.

The documents and records that customers need through
discovery are being kept top secret by the enemies
of transparency in the form of the DOJ, JPM, and
Louis Freeh. Lead counselor Koutoulas from the class
action lawsuit estimates that customers could be
made whole to 85% without bickering. See the Brother
John article from which the above is directly taken
(CLICK HERE).
Bear in mind that the MFGlobal fraud is built
upon calling the bankruptcy a financial firm failure
(where investors are last in priority), when it
is actually a financial brokerage firm failure (where
investors are first in priority). At issue is
investor account restoration. The Commodity Futures
Trading Commission has ruled in a declaration of
a financial firm failure, in direct opposition to
the Trustee and Bankruptcy procedure playing out
in a travesty. Look for injustice served in the
class action lawsuit outcome.

◄$$$ THE POPULAR LIE STORY IS BEING PROMULGATED
THAT THE MFGLOBAL FUNDS ARE INDEED GONE FOREVER.
THEY WERE STOLEN, THE FUNDS KNOWN IN LOCATION, AND
THE COVERUP WELL ALONG. AN ATTEMPT IS BEING MADE
TO BURY THE THEFT WITH A MANHOLE COVER. THE STORY
IS BEING TOLD, SO AS TO GIVE IT MORE CREDENCE, SO
THE US-PRESS WILL RUN WITH IT. $$$

The Wall Street Journal would have people believe
that the MFGlobal funds are missing, never to be
recovered, blown away in the hurled winter wind.
People familiar with the investigation are giving
up on the hunt for the missing $1.2 billion in client
funds, or $1.6 billion. They do have their orders,
to make a good appearance, then leave the crime
scene, certainly do not divulge what turns up in
the hunt. Obstruct the records flow. Let the trails
go cold. Look the other way when required. The gaggle
deeply devoted to the coverup probe grinds on, which
includes regulators, criminal and congressional
investigators, and court-appointed trustees. Their
findings so far suggest that a significant amount
of the money could have vaporized as a result of
chaotic trading at MFGlobal during the week before
their October 31st bankruptcy filing, so goes the
official word. Investment funds do vanish from
basic bond loss, to be sure, but it was MFG positions
that should have been ruined, not sideline customer
accounts. The new spin sounds like a solid conclusion
after an army of legal beagles and private eyes
plied their trade. The story must be told and given
credence. The venerable Wall Street Journal is doing
its level best to paint the walls the proper color
to cover the blood stains and grafiti.

The vulture funds have descended on the field of
bodies with missing bones. They have confronted
the aggrieved MFGlobal customers with offers between
72 and 85 cents per dollar for their claims. The
Wall Street Journal certainly cast gloom on their
prospects for any recovery and hopes of justice.
A truly queer new angle must be dealt with, casting
a strange light. The losing party clients must
settle their income tax obligations for 2011.
Until they can prove the funds are not recoverable,
they bear the responsibility for their tax obligations
on the full amount. If they call their investments
worthless, then they will have a difficult time
working against their own accounting. If they settle
with the vulture funds, they can take the loss and
move on, having capitulated to the despair and lost
sense of justice. They can blame once more the seamy
partnership between the USGovt and Wall Street.
The manner in which the exchange, the regulators,
the court, and the Obama Admin have dealt with the
entire case is beyond despicable. This is the Madoff
movie sequel, starring Jon Corzine, who will never
see one day of prison before, during, or after any
trial that will likely never occur. See the Wall
Street Journal article (CLICK HERE).

◄$$$ ANOTHER ANGLE TO THE MFGLOBAL CASE POINTS
A FINGER AT MELLON BANK, GIVEN SPECIAL TREATMENT
BY THE C.F.T.C. IN ITS BACK DOOR FOR PILFERED FUNDS.
MANY ARE THE DOORWAYS THROUGH THE WALL STREET SEWER LINES. $$$

The implication is that financial regulators have
gone rogue. Reports have come that the corrupt
Commodity Futures Trading Commission (CFTC) is permitting
Mellon Bank of Pennsylvania
to hold large foreign currency positions that are
currently on margin call. These foreign currency
positions are associated with illegal compounded
derivatives and the London LIFFE Exchange. The Goldman
Sachs preppie tool CFTC Chairman Gary Gensler met
in early February in Naples
Florida with representatives
and lawyers from CME Group. The emboldened Gensler
told the CME Group representatives to ignore the
margin calls on Mellon Bank. The over-extended
Mellon Bank currency positions have a backdoor link
into the Federal Reserve Bank of New
York, with a direct bearing on the alleged missing
$1.2 billion of missing MFGlobal customer segregated
funds. This is a protected Ponzi scheme. Other
grand irregularities are visible. During the MFG
bankruptcy, whose fiasco intertwined with the Syndicate
stronghold JPMorgan, the same Gensler signed an
emergency edict, which allowed banks and security
firms to be exempt from the rules of the CME Group.
The case was quickly transformed into a financial
firm bust rather than the actual brokerage firm
bust. Curiously, the USDept Justice attorneys have
ruled the action of the CFTC Chairman to be illegal.
But they have yet to receive phone calls from the
Wall Street lieutenants. See the MySpace article
by Tom Heneghan (CLICK HERE). Division
exists in the USGovt everywhere among agencies versus
elected officials, as checks & balances have
turned confrontational. The Syndicate rules while
the People's Representatives twist in the wind.

ZERO INTEREST
RATE POLICY DAMAGE

◄$$$ USDOLLAR IS CAUGHT IN A COLLAPSE, DUE
TO EXTERNAL FORCES FROM REVOLT ON TRADE, AND TO
INTERNAL FORCES ON MONETARY INFLATION ALONGSIDE
BROKEN CREDIT ENGINES. THE USFED SPREADS HERESY
AND TOXIC POLICY AMONG FOREIGN CENTRAL BANKS TO
ENSURE THE MONETARY DESTRUCTION. THE FIXED RATE
BY THE USFED AT 0% UNTIL 2014 IS A CLEAR CALL FOR
ALL CENTRAL BANKS TO STAY ACCOMMODATIVE. THE RESULT
WILL BE LESS COMPETITION TO THE USTREASURY BONDS,
BUT MORE IMPORTANTLY DESTRUCTION OF CAPITAL GLOBALLY.
IN EFFECT, THE USFED DECLARED CURRENCY WAR LOUDLY
AGAINST ALLIES AND GOLD ALIKE. THE HIDDEN DAMAGE
IS TO WORKING CAPITAL. $$$

Doug Noland of the Prudent Bear provides a fine
preface for the latest FOMC Meeting directive to
maintain the 0% rate policy for another two years.
He wrote, "The Fed committed yet another
major error this week. The worsening European crisis
last year created a major artificial bid to perceived
safe haven Treasury (and related) securities. This
amounted to a major loosening of financial conditions
for the commanding sector of US
credit expansion. The Fed should have recognized
how this dynamic had created heightened bubble risk
throughout our government debt markets (Treasury,
Agency, MBS, Munis, etc). Instead, the Fed has
administered gas to the fire, along with pronouncing
that it is content to stand gas can in hand for
some years to come. The Bernanke Fed has created
a backdrop further supportive of speculative leveraging,
and global risk market speculation more generally.
Worse yet, our central bank is determined to punish
savers into submission."

USFed Chairman Bernanke publicly built the basis
platform for more bond purchases. He pointed to
high unemployment and low price inflation. He
fails to realize that the continued sustained 0%
official kills the economic apparatus and eliminates
jobs en masse. He cannot measure price inflation,
his error being at least 8% too low. The central
banks are far out of control. The official statement
from the FOMC read, "[The committee] recognizes
the hardships imposed by high and persistent unemployment
in an underperforming economy, and it is prepared
to provide further monetary accommodation."
One should wonder if they comprehend the effect
of their monetary policy even remotely, in killing
marginal businesses and thus its working capital
(machinery, equipment, labs, buildings). The policy
statement was widely regarded as an unambiguous
aggressive statement. Most analysts anticipate the
next large scale announced bond monetization program,
apart from the secretive flurry of bond purchases.

Notice the identification of the Bond Bubble with
a USTreasury core. With continued easy money policy
and heavy bond purchases, done in secrecy in huge
volume, the effects are profound. The principal
effects are to create the USFed as a virtual banking
system, offering low yields to banks for security,
to pressure the cost structure in a constant manner,
thus leading to capital destruction from retired
equipment in marginal businesses, but with the supposed
benefit of reduced price pressures from prevalent
liquidation. The bank deleverage process only
adds fire to the liquidation factor. The USFed is
trying avoid a massive financial system liquidation,
and therefore puts the tangible sector at great
risk. The consequence of monetary policy is
to push costs higher. The business shutdowns work
to push end product price pressure lower, the worst
possible business environment. Meanwhile the big
banks operate as broken credit engines, suffering
from the hangover overhang of home inventory and
profound insolvency.

The nation is witnessing a powerful capital
rot from the inside, during a global attack from
the outside against the USDollar itself. The
dependence is engrained and rooted for the Printing
Press in USDollar output that is hardly wealth.
The dependence is engrained and rooted for the Interest
Rate Swap for keeping the bond yields down at the
periphery, a basic leverage device. Trust among
banks has been eroding for over four years, since
the advent of the commercial paper fiascos in 2007.
Inter-bank lending is a constant challenge. The
contagion in the decaying rot process is sent across
the oceans via Dollar Swap Facilities. The USFed
has assured the continuation of the Competing Currency
War melded with hyper monetary inflation. No
major foreign central bank will dare to hike rates,
experience a currency valuation rise, and endure
the harmful impact on the export trade. The USFed
has declared currency war on its allies, while sustaining
its war against Gold, all the while maintaining
a war against capital. See the Bloomberg article
(CLICK HERE).

◄$$$ MAJOR CENTRAL BANKS ARE HELLBENT ON
MAINTAINING THE FLOOD IN HYPER MONETARY INFLATION.
THEY DO NOT COMPREHEND THE CAPITAL DESTRUCTION AND
ECONOMIC DAMAGE. YET THEY CONTINUE, KNOWING NOTHING
ELSE BUT THE MISSION
OF INFLATION MANAGEMENT. THE GLOBAL Q.E. MOVEMENT
PERSISTS. $$$

The USFed is stuck at 0%, cannot raise rates
or else shatter both the USGovt debt service and
the USEconomy. Worse, higher rates would implode
what remains standing in the US
financial sector, led by the big banks. They
have committed for another two years at zero cost
money. In doing so, the USFed has forced all major
central banks to join 0% or else face a gradual
currency rise and its wreckage. A mouthpiece urged
the USFed to do all it can to reduce very high unemployment
and bring inflation back up to more desirable levels,
but with a flawed policy. John Williams of the San
Francisco Fed said, "It is vital that we
keep the monetary policy throttle wide open. That
will help lower unemployment a little bit quicker,
and raise inflation back toward levels consistent
with our mandates. And importantly, we want to do
so quickly to minimize total economic damage."
Wrong on all counts. The accommodative low rate
will push working capital out of action, shut down
marginal businesses, lead to job cuts, and cause
continued widespread economic damage. The USEconomy
will never enter a recovery phase with a 0% millstone
around its neck. The capital destruction effect
is the greatest blind spot in central bank monetary
history. The intentionally talk down price inflation,
but they are not too aware of systematic destruction
of working capital. Furthermore, the ultra-low rates
offered to the entire saver class slows the USEconomy
tremendously. See the Reuters article (CLICK HERE).
The Black Hole that is the USDollar funnel will
continue to suck value and integrity from the system,
including personal wealth and all it touches. Nations
and entities that attempt to avoid it have been
labeled as rogue or worse.

The United
States has moved from crisis
to crisis without recognition that monetary policy
is a root cause. The tech/telecom bubble in 1999
was followed by sharp interest rate cuts in 2001
and 2002. The housing boom was encouraged in 2002
so as to lift the USEconomy out of the mires of
recession. The housing bubble in 2005 was followed
by sharp interest rate cuts in 2008 and 2009. Nothing
has been learned. Under the Bernanke, the USFed
has reduced rates to zero, kept them at zero for
over three years, and followed the egregious errors
with more daft action in purchasing of $2 trillion
in USTBonds and US Mortgage Bonds. The cental
bank talks of easing borrowing costs and stimulating
growth, but they do the opposite. They know
nothing else but aggravated monetary inflation,
having painted themselves in the corner, deeply
dependent upon easy money. They have developed a
deep dependence upon asset bubbles, whose aftermath
assures a systemic failure. It is in progress, little
recognized. Two years from now, the US will still be talking about justification of
0% rates, if the system can last that long given
the global revolt against the USDollar and the rising
isolation of the USGovt for its debt finance, as
in dependence upon the ultimate asset bubble, the
Printing Press for USDollars. The path to USGovt
debt default is the current path.

◄$$$ COMMITTED TO SUPPORT THE AILING BOND
MARKET, THE BANK OF ENGLAND
WILL ADD $79 BILLION OF FAKE MONEY INTO THE UKECONOMY
AS STIMULUS. GLOBAL Q.E. CONTINUES UNINTERRUPTED
BUT NOT FULLY RECOGNIZED. IT NEVER STOPPED LAST
YEAR. $$$

On February 9th, the Bank of England announced it will pump another GBP 50
billion (=US$79 bn) into the economy. They called
it protection of a budding growing recovery. The
Monetary Policy Committee raised the target for
cumulative bond purchases to a total of GBP 325
billion, more than a quarter to be current outstanding
UKGilts. Dissent was registered from Albert Edwards
of Societe Generale, who accused the British of
mimicking the USFed's ruinous polices, upon directives
by BOE head Mervyn King. The policy led to the current
financial crisis but they continue in place. Former
Fed Chairman Alan Greenspan cut interest rates at
the start of the last decade in a move critics believe
helped create a debt bubble years later. The current
Bernanke Fed reduced rates to a record low, kept
them at near 0% longer than at any time in central
bank history, and embarked on a policy of monetized
bond purchases (Quantitative Easing). He talks about
easing the cost of borrowing and growth stimulus,
but the monetary policy achieves neither. See the
Bloomberg article (CLICK HERE).

Edwards, the top strategist at Societe Generale,
is no slouch. He delivered an extremely critical
and surprisingly effective lambasting of the Anglo
central bank villains. He wrote, "There
is a healthy debate in the United States about the culpability of the former
and current heads of the Fed for the inevitable
debacle. [Bank of England
head Mervyn] King is similarly responsible for presiding
over a copycat catastrophe. It is the monetary authorities
in both the US
and UK
who are almost wholly responsible for allowing this
lax monetary environment and the boom and bust in
their respective economies. Not the over-exuberant
actions of lenders and borrowers. Central bankers
have been working very hard. Working hard that is,
to deflect blame away from themselves. If knighthoods
are being removed for those held primarily responsible
for the 2008 economic collapse, Sir Alan Greenspan
and Sir Mervyn King should also be stripped of their
honors. King is largely more responsible than Goodwin
for the collapse in the UK
banking sector, and should be held to account. Instead,
the man and the institution are being given more
power."

◄$$$ COMMITTED TO HALT THE RISE IN THE JAPANESE
YEN, THE BANK OF JAPAN
WILL ADD $128 BILLION IN MOSTLY JAP-GOVT-BONDS ON
LONG-TERM TYPE. THEY REACT TO A STUBBORNLY RISING
YEN CURRENCY THAT PERSISTS IN THREATENING THEIR
VAST EXPORT INDUSTRIES. $$$

Some shock came as the Bank of Japan announced
on February 14th a big add-on to their Quantitative
Easing program that has extended over 20 years in
time. Notice Japan never exited the 0% corner, a lesson for
Americans to observe. They join the USFed, the Bank
of England, and the Euro Central
Bank in Global QE. In late January, the Japanese
Govt surpassed the JPY 1 quadrillion mark in total
debt, a major milestone. The BOJ has relied
in recent months on asset purchases to stimulate
the economy. The recent addition has expanded that
plan by JPY 10 trillion, equal to US$128 billion.
The Japanese Economy at $6 trillion is in slight
decline, the damage from the earthquake & tsunami,
and interruptions to the export industries &
supply chains. In US
terms, in similar proportions, the QE add is like
the USFed putting in place a $325 billion new QE
package, which is big enough. The JapYen currency
is rising in response, up over 400 basis points
from its low two weeks ago. That lifts the export
sails. The other continent moved in lockstep also,
as the Euro Central Bank remains committed to its
own EUR 500 to 1000 billion bond purchase program.
The global central bank balance sheet reads like
a shopping list by Alphonse Capone in purchase of
liquor during the Great Prohibition. The string
of QE orders with the February 14th climax in Japan paints the entire picture of a Central Bank
Valentine's Day massacre, the killing done to capital
by the respective national monetary stewards. See
the Zero Hedge article (CLICK HERE).

A quick view from the ground by a subscriber in
Tokyo. My question focused on the validity of recession
in Japan, against a backdrop of a rising Yen currency.
He replied, "I cannot speak to the quality
of the numbers, especially since the government
was caught years back cooking the books on their
GDP numbers, but anecdotally a contraction in the
4th quarter of 2011 does make sense to me as most
restaurants have had fewer customers. A few
Japanese people that own restaurants were complaining
how poor it was. Traffic in general has seemed lighter
than usual in December, which is generally a very
busy time of year with bonenkai (year end parties)
which were scrapped in deference to the victims
of the quake/tsunami. The Japanese lifetime labor
covenant with employees is now dead as more and
more firms are hiring arbeito (part-time workers)
who work full time hours but have few if any
benefits. So it is obvious that if jobs are not
off-shored, domestic employees receive less pay
and few benefits. [Case in point,] Citibank is offshoring
from Japan to China. Japan
is well on its way to being hollowed out like the
United States has been over the past 25 years.
It has been happening in slow motion, but picking
up speed with the strong yen now. Let me make it
clear that I am impressed with your work. You called
the Japanese Yen rising bang-on against all others
last May."

◄$$$ THE DEMISE OF THE USDOLLAR WILL BE WRITTEN
IN TERMS OF TRADE. THE PETRO-DOLLAR IS THE MAGNIFICENT
FOUNDATION FOR GLOBAL TRADE BASED IN THE USDOLLAR.
TIMES ARE CHANGING. NEW ACCORDS ARE BEING FORGED.
THE FOCUS IS ON THE PERSIAN GULF NATIONS, NOT ONLY
SAUDI ARABIA. EVENTS IN RESPONSE
TO IRAN
SANCTIONS HAVE MOVED THE INITIATIVE FORWARD. $$$

Words are difficult in describing the importance.
The Persian Gulf nations
are in the process of changing the global financial
structure as a result of altering the defined fixed
enduring global trade payment system. In the
most risk filled and profound financial conversion
in recent Middle East history,
the Gulf Arabs are planning to end US$ payments
for crude oil. In accords being struck with along
with China,
Russia,
Japan, and France, they are moving toward a basket of currencies
including the Japanese Yen and Chinese Yuan, the
Euro, Gold and a new unified currency. It likely
will not emerge from nations in the Gulf Cooperation
Council, since the group possesses no great military
strength. Expect the emerging currency to come from
Europe, agreed upon by Germany, Russia,
and China.
Typically the United
States defends the Petro-Dollar
fiercely, even with war, using various sabotage
projects, and by falsely stated causes. Secret meetings
have taken place every year toward a replacement
goal for the Petro-Dollar, having outlived its effectiveness.
The plans continue apace, but slowly, while the
players grow in number, along with what the new
nations bring to the table. In April 2010, more
meetings took place (Arab royals only) to forge
the other half of the accord, the security protection
for the Persian Gulf. The function
will be provided by China
and Russia.
The two nations completed the accord, not publicized
since so dangerous. The Iran sanctions have
pressed the initiative toward a basket for crude
oil payments, or Gold payments, or other barter
payments. See the 2009 UK Independent article that
is increasingly relevant today (CLICK HERE).

◄$$$ JIM SINCLAIR ANTICIPATES SOME SEVERE
REACTIONS TO BERNANKE'S DECLARATION OF THE OFFICIAL
PERMANENT 0% RATE. SINCLAIR BELIEVES THE MAINSTREAM
WILL NEXT ENTER THE GOLD TRADE AS AN INVESTMENT
TO STORE CASH IN A SAFE MANNER, AS HEDGE TO THE
CURRENCY DEBASEMENT, AND AS SAFE HARBOR AGAINST
FRAUD. THE CASH POSITIONS OF CORPORATIONS WILL FIND
GOLD AFTER BEING BURNED BY COMMERCIAL PAPER AND
MONEY MARKETS. $$$

The populist gold advocate Jim Sinclair believes
the recent FOMC meeting where the USFed announced
the Zero Interest Rate Policy (ZIRP) virtually almost
forever marks a milestone. When every several
months the ZIRP is assured farther into the future,
it begins to look permanent, the result of policy
failure, even mushrooming systemic failure.
Their admission reeks of desperation and being lost
in heretical textbooks. Here are Sinclair's thoughts.
He believes the mainstream entities like insitutions
and the public will next enter the gold market.
The USFed turned the light on for QE to infinity.
The announcement itself is a game changer. Expect
a significant mindset change among investors, corporations,
and companies with extra capital in the mainstream.

Gold will be found and accepted as a hedge against
current debasement policies. Until now the fringe
retail crowd and the international central bank
crowd have been the primary entities in Gold. Look
for new demand to come from mainstream investment,
mainstream pensions, mainstream life insurance companies,
mainstream health plans, which must employ a strategy
to preserve and grow buying power. This represents
huge potential new demand, a total new definition
as he calls it. Public companies with significant
resources, like tech companies, will soon start
to recognize that Gold is an important part of protecting
their cash position, which cannot earn a satisfactory
yield. Corporate America
and corporate global Western finance will begin
to look at Gold as an alternative to the normal
cash and debt instruments they would use to hedge
themselves. Many like commercial paper, mortgage
bonds, and money market investments have burned
them with unexpected losses, since traditionally
so safe. No more.

This new 2012 will become a year of action, not
necessarily toward a solution, but of action. Actions
like with the USFed swap line, the IMF loan distribution,
the major central banks ramping up QE bond purchases,
these are examples of action taken. A lulu action
would be a bank recapitalization initiative. Sinclair
believes the ZIRP Forever call by Bernanke marks
the beginning of a great rise in the Gold price
after almost a year of consolidation. He forecasts
Gold to trade this year at a price between $1700
to $2100 in a conservative range. When Gold next
breaks out to new highs, it will be powered by lost
confidence, primarily in currencies. The monetary
system continues to crumble this entire year with
focus on Southern Europe, but the US
has its own budget nightmare, without a funding
nightmare, due to printing press abuse in hidden
fashion. Sinclair warns that the USDollar, not the
Euro, is the specie in danger. See the King World
News interview (CLICK HERE).

An unnamed USDept Treasury official commented that
the Federal Reserve Board will discuss negative
short-term interest rates at a May meeting. Some
actually wish it could be. Imagine if the current
ZIRP (zero interest rate policy) was pushed into
the negative zone. Money deposited at a bank would
require a payment to the bank to keep it safe. Stored
savings would be cheaper in a safety deposit box
or a mattress, even a hole behind the refrigerator.
So brokers would pay clients who borrowed funds.
What lunacy, but not without precedent. Japan
a few years ago experimented briefly with negative
rates. The USTreasury Bond bubble is struggling
at its apex valuations, unable to go higher. The
value rise is not due to final demand, but from
Interest Rate Swaps gone amok as they create artificial
gigantic demand. JPMorgan owned $61.53 trillion
in OTC Swaps in 2007, the figure surely higher over
four years later. The top five banks owned double
what JPM alone held. One must ask why, and for what
purpose, and to achieve what end. The answer lies
in prevention of a USTBond meltdown from aggravated
high debt issuance in supply, due to the maintenance
of the 0% bond yield.

The next natural chapter to the insanity is negative
rates, but to halt the newfound role for the USFed
in serving as the entire banking system. The real
rate of interest has been negative for years. Take
the long-term bond yield, like at 2% or 3%, and
subtract the price inflation rate, like at 8% to
10%. The real interest rate is in the minus 5% to
minus 7% range. Naturally, the short-term bond might
be pressured to seek a negative return in a nominal
sense. The gold lease rate has been negative often.
To keep the broken monetary system on course, bullion
banks pay investors to borrow their Gold in order
to sustain the high gold volume for sale. Better
yet, in order to avoid nasty gold shortage episodes.
The return on some money market investments has
been negative at times. Every Ponzi Scheme has an
end chapter. With so many types of instruments flirting
with negative returns, the financial markets might
soon face some bizarre anomalies. See the Economix
weblog article (CLICK HERE).

◄$$$ SHOSTAK FROM THE VON MISES INSTITUTE
MAKES A FOOL OF NOBEL PRIZE WINNING HACK ECONOMIST
PAUL KRUGMAN. THE ISSUE IS A DEPLETED POOL OF SAVINGS,
THE RESULT OF ABSURDLY LOW INTEREST RATES. THE CONSUMER
IS OVER-EXTENDED. THE PRODUCTION APPARATUS IS COMMITTED
TO PRODUCE IN EXCESS. THE SAVERS CANNOT SAVE ADEQUATELY.
THE BANKS LACK SAVING DEPOSITS FROM WHICH TO FORM
LENDING CAPITAL. MOST COMMON KEYNESIAN APPLICATIONS
ARE BACKWARDS AND DESTRUCTIVE AS APPLIED IN THE
UNITED STATES. $$$

In his New York Times article of mid-January, the
Nobel laureate economist Paul Krugman shared his
lack of wisdom. He wrote, "If nothing else,
we have learned that the liquidity trap is neither
a figment of our imaginations nor something that
only happens in Japan.
It is a very real threat. If and when it ends, we
should nonetheless be guarding against its return,
which means that there is a very strong case both
for a higher inflation target, and for aggressive
policy when unemployment is high at low inflation."
He concludes that the USFed almost surely will not
and cannot start raising interest rates. He implies
that the USEconomy could be pulled out of the liquidity
trap by means of more inflation. What trash in thought
pattern. What doggerel. Krugman is incorrect about
almost everything on a consistent basis, clearly
the dumbest blockhead ever to win an Economics Nobel
Prize. In my view, it was bestowed in order to create
some legitimacy to the wreckage that has become
the USFed monetary policy and to offer cover for
its harmful economic effect.

The liquidity trap has been in full force for the
last three years. If the USFed were to attempt to
execute an Exit Strategy from the 0% corner, it
would not attract sufficient savings since next
to nothing is still almost nothing on returns. Higher
rates would have the double barreled harmful effect
of forcing up mortgage rates and consumer loan rates
and commecial loan rates, while also running up
the USGovt borrowing costs in signficant manner.
The struggling USEconomy, mired in an unidentified
recession, could not withstand the hike. Worse,
the hidden chambers, where Interest Rate Swap contracts
lurk, would experience a shock wave. The deleverage
process in banks has a powerful effect. But the
deleverage of IRSwaps would be catastrophic for
both the big banks that put them to work and the
economy where they are placed.

Frank Shostak on the Von Mises Institute disputes
most of Krugman's vacant utterances. He argues
that the heavy backfire on the ground level has
been felt with the Liquidity Trap, in the form of
a shrinking pool of real savings. As long as
the rate of growth of the pool of real savings stays
positive, the pool can continue to sustain productive
and non-productive activities. However, when loose
monetary and fiscal policies work their magical
destruction, trouble erupts. The structure of production
emerges that ties up much more consumer goods than
the amount it releases. This excessive consumption
relative to the production of consumer goods leads
to a decline in the pool of real savings, at a time
when the horribly low rates offered to savers depletes
the bank deposits. A grand double whammy comes
from the so-called consumer economy, long an object
of Jackass ridicule. The result is weakened support
for economic activities, resulting in the USEconomy
falling into a slump. The banks lack capital and
converted savings from which to lend. Without an
expanding pool of real savings, any expansion of
bank lending is going to lift bank nonperforming
assets. The shrinking pool of real savings contradicts
directly the commonly accepted fallacy that the
loose monetary policy of the central bank can grow
the economy. Then again, the USFed promotes
heresy, and operates with vast blind spots. The
near permanent 0% rate guarantees a gradually falling
pool of real savings, despite the talk of stimulus.
The USFed high priests have been wrong about every
single pronouncement and assessment since 2006.

Shostak rebutts Krugman effectively, making a fool
of the prize winning quack charlatan. He wrote,
"Contrary to Krugman, we suggest that the
US economy is trapped, not because of a sharp
increase in the demand for money, but because loose
monetary policies have depleted the pool of real
savings. What is required to fix the economy is
not to generate more inflation but the exact opposite.
Setting a higher inflation target, as suggested
by Krugman, will only weaken the pool of real savings
further and will guarantee that the economy will
stay in a depressed state for a prolonged time."
See the Von Mises article (CLICK HERE).
More inflation will cause higher costs, more retired
capital equipment, fewer jobs, and less savings,
in a vicious circle not recognized.

EUROPE &
GREECE SPARKS

◄$$$ JOHN TAYLOR EXPECTS A POWERFUL LEHMAN
EVENT IMMINENTLY. THE DAMAGE WILL DIRECTLY RESULT
IN BANK SECTOR WRECKAGE AND DEEPER INSOLVENCY. WHAT
FOLLOWS WOULD BE THE BANK SECTOR BEING VAPORIZED,
THEN EXTREME MONETARY INFLATION DURING AN HISTORICAL
RECESSION. $$$

John Taylor is an outstanding economist with one
foot in the system pond, but whose work tends to
put an accurate spotlight on that distorted system.
His Taylor Rule helps to explain the relationship
between the official FedFunds rate and the USEconomic
growth rate, as in control room dynamics. He commented
on the European situation that defies solution.
He wrote, "Major losses should apply not
only to sovereign borrowings but also to accounts
receivable for cars, electronics, and other consumer
goods. The market has not opened its eyes to the
impact this Greek unraveling will have. The EuroZone
will be mortally wounded and the world will suffer
a significant recession, maybe as deep as 2008.
European banks will lose much of their capital
base and many should be bankrupt, but just as in
the Lehman aftermath, the governments will try to
save the banks and the bank bondholders, solvent
or not. As the bank appetite for Eurozone sovereign
paper will be decimated, austerity will probably
follow shortly, followed by deflation and uncontrollable
money creation. The European recession should
be one for the record books." He spells
ugly. My belief is that he only covers half the
damage. The ripple effects will hit London
and New York banks, but worse, due to the corrupted interpretation of bond
default, the system will suffer integrity problems
as participants distrust anything and everything
imposed by leaders. The lost trust will translate
into more Gold ownership and demand, if not a financial
rebellion of sort, which will put incredible pressure
on the LBMA and COMEX. The focus will undermine
the exchanges further.

Rob Kirby offers a perspective, always valuable.
His knowledge of bonds, derivatives, and banks is
superlative. He believes the United States is in virtually
the same insolvent terrible situation as the PIGS,
but masked by the Printing Press running overtime
at the 0% rate. He describes the hyper monetary
inflation final chapter. He wrote, "The
Lehman incident was stealth recapitalization of
JPMorgan. EuroZone sovereign debt paper is fundamentally
no worse a bet than USTreasury Bonds, which owe
their sustenance to criminal activities of the USTreasury
& Fed Complex via the Interest Rate Swap mechanism.
Funny thing no one wants to talk about, as in if
the PIIGS could fund themselves at 0% [official
interest rate] like the United
States, they and EuroZone banks
would appear to be as solvent as the United States. The reality is that all countries
hooked on the irredeemable fiat debt money system
are toast. This has everything to do with the very
nature, or life cycle of fiat money, which dictates
that at some point money supply or debt must
grow vertically. Anyone who takes the time to
read the Feds own data can see this is exactly what
is happening. What we are witnessing in the failing
EuroZone countries is exactly what will happen to
the United
States if they are ever forced
to abandon ZIRP. Put another way, the US
Government cannot afford to pay market rates of
interest any more than Greece, Italy,
or Portugal.
The [situation] dictates that we will hyper-inflate.
It is only a matter of how much pain is inflicted
on humanity first." Only when the public
begs for a solution, even if a destructive one,
will the hyper monetary inflation spigot be turned
on in a very public and demonstrative manner.

◄$$$ REPORTING ON THE GREEK AND SOUTHERN
EUROPE PROGRESS TOWARD A VIABLE SOLUTION IS FRUSTRATING.
THE SITUATION IS SO UNSTABLE AS TO DEFY DESCRIPTION.
SOME CONSTANTS EXIST AT THE TOP IN INTRACTIBLE SOLUTION.
IN CONTRAST NOTHING IS CONSTANT AT THE BOTTOM WHERE
THE PASSAGE OF TIME BRINGS CHANGE. $$$

Attempting to report on the ongoing development
concerning the Greek Govt Bond aid packages, compromise
deals, and austerity plans is like reading a month-old
newspaper. What seems news today changes so radically
in a matter of a day or two, especially one week.
The news becomes so obsolete, so quickly, that the
wisdom of reporting specifics makes little sense
at times. Sometimes before lunchtime in the US
and Canada,
a deal struck in Europe comes
apart on the same day. The constant during the
entire unfolding episode is a simple mosaic of destruction
of the bank sector and bond market from insolvency,
failure of austerity budgets forced into place to
remedy deficits, a steady stream of debt downgrades,
far more central bank bond purchases than desired
or preferred, and increasing violence on the street.
More importantly, the other magnificent constant
is the absence of stability in solutions agreed
upon. The observer is left wondering what parties
actually are in control, as the politicians and
EU technocrats forge deals that the bankers and
hidden powers reject almost as quickly as the deals
are struck. The march is on toward a March showdown
on the next big $19 billion payment due by the Greek
Govt on their debt, which itself is the result of
a deal struck that seems unstable. My attitude is
a bit defiant and unusual. If one were to read the
previous monthly report on the European and PIGS
debt problem, nothing much has changed at the top
in stable fashion, but almost everything changes
at the bottom with agreements, budget battles, bond
controversy, asset grab attempts, and buildings
burning.

◄$$$ A PLANNED GREEK GOVT DEBT DEFAULT EVENT
IS COMING. AN EXCLUSIVE BY THE SLOG. SENIOR US-BANKERS
HAVE BEEN GIVEN AN EXPLICIT TIMETABLE FOR THE ATHENS
DEFAULT. THE PROJECT SEEMS URGENTLY REQUIRED YET
PRACTICALLY IMPOSSIBLE. THE CONTINGENCY RESULTS,
THE BREADTH OF EFFECTS, AND THE UNINTENDED CONSEQUENCES
CANNOT BE ADEQUATELY FORESEEN OR PROPERLY PLANNED.
THE POWER CENTERS (BANKING, POLITICS) REALIZE SOMETHING
MUST BE DONE. $$$

For an accurate depiction, think herding 100 cats
let loose off a truck in an open field. A solution
is required, since the current situation with solutions
and breakdowns and changes and rejections has proceeded
on course for two full years. The tragic truth
is that without exit from the Euro Monetary Union
(common Euro currency usage), Greece will continue
to sink into a deep dark hole while at the same
shed forfeit its prized assets to foreign bankers.
Greek as a nation desperately requires not a
bailout, but a debt restructure followed by a currency
devaluations. This reality is understood
by both the power centers and the people who run
Greek businesses and walk Greek streets. The harsh
reality is sinking in finally. The extension of
bailout negotiations, the tough butchery to the
economy from budget cuts, the ruin of domestic banks,
the risk of big asset seizure, these all seem pointless
to the public on a growing basis. So violence has
erupted in Athens,
pictures for which will not be shown. The Hat Trick
Letter chooses not to display burning buildings
and people being gassed. The Greek Military and
police have made two important points. They will
not carry out widespread arrests. They will though,
arrest European Union commissars if they set foot
on Greek soil.

The Slog (aka Hat4UK Wordpress website) has reported
a blueprint for the Greek default. It is worthwhile
reading and seems highly accurate and credible.
The existence and need for a plan is of the utmost
urgency, absolutely required, since the demolition
will have to be as carefully planned and executed
as bringing down a 50-story hotel in Las Vegas. The risk of ancillary damage is great. If the planners figure
out successfully even 75% of the reactions and contingencies,
they will be geniuses. The Wall Street leading banks
have the plan in their possession, probably principals
in the plan since JPMorgan is a huge CDSwap contract
under-writer on all PIGS sovereign debt insurance.
They have a stake in blocking out the hundreds of
$billions in awards upcoming. Permit a complete
quoted section from the Slog, rather than paraphrase
since too important. Notice immediately the emphasis
of timetable, not contingency, which means the default
is a known assured event. The Greek Economy will
no longer use the Euro currency after the March
date. Some credibility comes from recent identified
events that appear to fall in synch with the development.
The Slog reports the following in full. See the
article for scattered details on events as they
have occurred, apart from the planned default, an
implosion event. The Slog reported the following
on a post from Thursday February 16th. No italics
will be used for convenience. What follows is by
the Slog in verbatim style.

A written document giving firm dates and detailed
actions for a planned Greek default has been
in the possession of two top Wall Street bank currency
trading bosses since the second week in January.
The Slog has separate but corroborative sources
affirming the existence of the document, and a conviction
among senior bank staff that, at least at the time,
the plan represented A TIMETABLE, NOT A CONTINGENCY.
The plan gives a firm date of March 23rd for
default to be announced after the close of business.
Senior bankers on Wall Street have been given detailed
documentation setting out a timetable to Greek default,
including firm dates and technical orders about
last use of the Euro as a currency there.
The revelation arrived at Sloggers Roost last Monday,
since when I have been trying to obtain corroboration.
This arrived in the early hours of today (Thursday).
One of the banks is Barclays Capital (Barcap) run
by controversial figure Bob Diamond. The other must
remain anonymous for the time being, in order to
protect sources.

The document asserts that Greece
will officially be declared in default by all the
ratings agencies after the close of business on
Friday March 23rd. At the weekend, all Greek
bank accounts will be frozen, with emergency measures
detailed to prevent the flight of capital. Included
in the paperwork is a list of very limited exceptions
to the no withdrawals order. All major banks are
instructed not to deal with Euro exchange as of
open of business in Greece
on Monday 26th March. All Greek markets will close
for one day at least. As yet, I have been unable
to establish the source of the documents. But one
of my informants admitted, 'I HAVE STRONGLY SUGGESTED
TO GREEK BUSINESS FRIENDS AND CLIENTS THAT THEY
SELL UP FAST, DO A SALE AND LEASEBACK ON PROPERTY,
EMPTY BANK ACCOUNTS, AND CHANGE TO A HARD CURRENCY.'
I have little doubt that such a critical path analysis
leading to default in Athens can be easily brushed
aside as contingency planning. But this is not the
impression Slog sources were given. Its existence
is bound to further raise suspicions in ClubMed
about the real intentions of EU Nord, Washington,
and the Troika, especially the IMF. In particular,
the alleged creation of the document both supports
(and/or coincides closely with):

5) A string of delaying tactics by senior
EU and Troika officials since mid January.

End of the Slog quoted report. Some final comments
by the Jackass. The European Union commissars have
been busy lately in playing down the horrendous
outcome and shock wave effects from a Greek default,
as though they will promote the planned implosion.
They cite a catastrophic impact to be only 20% likelihood
at most. New Euro Central Bank head Mario Draghi
has been pumping money overtime into the banking
system in Europe, which is much larger than in the
United
States. In opposition, the
German camp has been busy in slowing down the commitment
of funds. Look for the plan to be tilted in favor
of the big US banks from the bond losses and insured
debt payouts, as the the plan intends to halt the
Greek contagion. The unstated goal is to focus
aid attention on the EuroZone, by concentrating
the bailout funds available to save the bigger
players in Italy,
Spain,
and France. The catch phrase
making the rounds in Brussels
at the moment is Amputate and Cauterize.
See the Slog article (CLICK HERE).

◄$$$ MOODYS CUT EUROPEAN DEBT IN YET ANOTHER
BROAD DECISION, A VALENTINE DAY SMACK. THEY KICKED
OUT ANOTHER PILLAR IN A WEAK UNSTABLE STAGE THAT
CANNOT STAND ON ITS OWN STRENGTH. NOTICE THE IGNORED
USGOVT DEBT STATUS, STEADILY KEPT UNTOUCHABLE. $$$

Moodys Investors Service, in the latest of an endless
process, again cut the debt ratings of six European
countries including Italy, Spain,
and Portugal.
The agency warned it may strip France
and the United
Kingdom of their top Aaa ratings,
citing the damage from the European debt crisis.Spain was downgraded to A3 from A1, Italy to A3 from A2, and Portugal to Ba3 from Ba2,
all with negative outlooks assigned. Moodys downgraded
the rating outlook for France
to negative. Slovakia,
Slovenia, and Malta also had their ratings lowered. The ratings
company affirmed its top Aaa rating for the European
Financial Stability Facility. The announced statement
read, "Policy makers have made steps forward,
but we do not think they have done enough to reassure
the market that we are on a stable path. What will
guide long-term ratings is the clarity and the performance
of policy makers and the macro picture. [Europe's]
increasingly weak macro-economic prospects [threaten
the] implementation of domestic austerity programs
and the structural reforms that are needed to promote
competitiveness. [Market confidence] is likely to
remain fragile, with a high potential for further
shocks to funding conditions for stressed sovereigns
and banks." The European debt crisis has
and will continue to deepen despite the regional
finance minister summit. It went poorly, as nothing
was agreed upon, a waste of time except for the
fine meals and hotel comfort enjoyed by the elite
donned in suits.

The sovereign bond markets are driven not so much
by the legitimately assessed impaired debt status.
Instead bond markets are driven by Euro Central
Bank injections, the hyper monetary inflation
reaction that has become engrained and fixed. Yields
on most Southern European sovereign bonds continued
to edge lower as a result of the European Central
Bank on December 21st allotment of a record EUR
489 billion (=US$643 bn) in three-year loans to
banks. Yields on Italian 10-year bonds have
dropped more than 1 percentage point since ECB's
injection, while French 10-year yields have declined
20 basis points in that period, safely under the
6% mark. In England, the official debt
consolidation program has interrupted any immediate
UKGovt downgrade. The spending cuts have helped
preserve its AAA credit rating at Standard &
Poors last year. The respected National Institute
for Economic & Social Research forecasts the
UKEconomy will decline 0.1% this year. They follow
with a vacant unreliable cheer leader forecast for
2013 worth ignoring since baseless. Michael Saunders
is chief European economist at Citigroup London.
He issued a written comment, saying "A negative
outlook statement typically indicates there is about
a one in three chance of a ratings downgrade in
the next 18 months." The real stone through
the front window will be a French Govt downgrade,
due sooner or later, all in time. See the Bloomberg
article (CLICK HERE).

The credit ratings agency Standard & Poors
downgraded almost all major Italian banks. The review
covered 34 of the 37 banks monitored by the agency.Italy's biggest financial institutions, including
UniCredit, Intesa Sanpaolo, Banco Popolare, Banca
Nazionale del Lavoro, and Mediobanca are among them.
A credit rating increased the cost of borrowing.
The decision followed the S&P two-notch downgrade
of the Italian Govt creditworthiness. The official
Fitch statement stressed further financial shocks.
It read, "The divergence in monetary and
credit conditions across the EuroZone and near-term
economic outlook highlight the greater vulnerability.
These sovereigns do not, in Fitch's view, accrue
the full benefits of the Euro's reserve currency
status." Fitch cut the Belgium
rating to AA from AA+, while Cyprus
was cut to BBB- from BBB. Slovenia
was downgraded to A from AA-. The Ireland long-term rating was maintained at BBB+.
All the countries retained a negative outlook, which
implies the possibility of a future downgrade soon.
Some analysts attribute the approved austerity plan
enacted by the unelected Monti Coalition as being
the impetus behind bringing down the Italian Govt
Bond 10-year yield below 6%. Actually, the more
precise reason is a staggering bid size from the
Euro Central Bank. See the BBC article on S&P
(CLICK HERE) and the Bloomberg
article on Fitch (CLICK HERE).

◄$$$ AN UNUSUAL DEVELOPMENT HAS OCCURRED,
AS THE USGOVT HAS DECIDED NOT TO MAKE A REGULAR
I.M.F. PAYMENT INTO THEIR GENERAL FUND. IT HAS BEEN
THE MAIN TILL FOR EUROPEAN BAILOUTS. THE SIGNAL
IS CLEAR FOR SOME UNUSUAL EVENTS TO FOLLOW. REGARD
THE JUDGMENT AS A PUNT. $$$

Lael Brainard is the USDept Treasury undersecretary
for international affairs. He reiterated that the
USGovt will not give the Intl Monetary Fund any
additional funds devoted for European bailout usage,
designed to solve the European debt crisis. The
official statement was read as prepared remarks
to the US Senate Banking Committee. It merely pointed
out the European awareness of the absent funding,
and gave a vacant peptalk to their leaders toward
solving the crisis. It cited a risk of a significant
adverse impact on the US
financial system. It seemed like an official punt
of the ball across the Atlantic. Brainard said, "The challenge Europe
faces is within the capacity of the Europeans to
manage and the administration has been clear with
our international partners that we are not seeking
additional funding for the IMF. We believe Europe
has the will and the capacity to manage these challenges
effectively. Nonetheless, if the Euro area were
to experience a deterioration of financial conditions,
this could pose important risks to our recovery."
Brainard praised Italian Prime Minister Mario Monti
for laying the groundwork for a more dynamic economy,
and Spanish President Mariano Rajoy for addressing
Spain's vulnerabilities with a historic restructuring
of its financial sector, in his words. See the Bloomberg
article (CLICK HERE).

◄$$$ THE ENTIRE DERIVATIVE BUSINESS IS OF
DEEP CORRUPTION, FROM THE START. THE NEW
YORK & LONDON
BANKING SYSTEMS WOULD HAVE COLLAPSED IN THE 1990
DECADE INCREDIBLY WITHOUT THE DERIVATIVE INCOME
FLOW. THE INHERENT CORRUPTION IS SOON TO BE EXPOSED
IN FULL GLORY. BLACK SWANS RULE THE WAVES. $$$

An associate colleague Greg from Chicago offered a perspective on the derivatives. The corruption of
the derivative arena has been covered and analyzed
in the Hat Trick Letter. The bond losses, even though
agreed upon, represent defaults. Insurance awards
from the big banks that have under-written the debt
insurance contracts are vulnerable. They are painfully
aware, and thus desperate to block the awards process.
Greg was a victim of the MFGlobal theft. He is a
veteran of the futures contract arena. He knows
the ancillary sectors well. He said, "The
central banks will print and distribute to cover
the derivative loss exposure, just like they have
for the last three plus years. The only people at
some risk are raptors, like the hedge funds, whom
they will not allow to claim Credit Default Swaps
on payouts. But they will try insanely hard to work
this out so Greece is really the worst, and it goes no further.
So over time all the countries will print themselves
out. In a static world, one in which sanity and
responsibility rules, the bond holders should
be restored since insured. However these bankers
have neither morals nor ethics, no sense of right
or wrong beyond what benefits themselves. Untold
power behind the scenes will dictate the outcome,
even if corrupt. Checkbooks to buy it all. Desperate
people will take ever more desperate moves. Go figure,
actually tens and maybe hundreds of things that
have occurred in the last two to three years would
have been considered Black Swan events only a few
years before."

◄$$$ THE HEALTHY CORE EUROPEAN NATIONS HAVE
BEGUN TO SNUB FRANCE.
THE NEW NORDIC EURO CURRENCY COULD BE CLOSE TO INCEPTION.
THE GERMANS DO NOT WISH TO INCLUDE FRANCE.
THE SNUB MIGHT BE A CLUE TO UPCOMING EXCLUSION.
$$$

On February 2nd, according to Bloomberg, "Finance
ministers from the four European area countries
with AAA ratings, Germany,
Finland,
Luxembourg, and the Netherlands,
will meet in Berlin
tomorrow afternoon, a German Finance Ministry spokesman
said." The omission of France
has become a well understood feature of Central
European future planning. At downgraded AA status,
France
is no longer a member of this club, regardless of
whether the group conducts important decision making.
A very long sequence of European summit meetings
has taken place, but not much of importance has
come of the gatherings that has stuck, nor provided
a solution. The public humiliation has made
an impact in the Sarkozy court. He must overturn
the massive lead gathered by his challenger Francois
Hollande in the April presidential elections. See
the Zero Hedge article (CLICK HERE)
for a comprehensive list of European summits from
the last year, and their hollow achievements, courtesy
of Reuters. Maybe the French can enlist the same
consulting group that the USGovt has hired, from
a small ally on the Southern Mediterranean that
looks northwest to Italy, so that the vote count can be controlled,
altered, and delivered in a manner in keeping with
the elite goals, plans, and corrupt needs.

◄$$$ GREECE IS A MESS, OBVIOUSLY UNFIXABLE, HAVING
TURNED INTO A TRAGIC COMEDY ON STAGE. GREEK OFFICIALS
AND THE EUROPEAN TROIKA ARE WORKING ON THE FINAL
DRAFT OF YET ANOTHER CRUCIAL RESCUE PLAN. MEANWHILE,
GERMAN BANKERS WITH THE TRUE POWER BLOCK THE AGREEMENTS
AFTER MADE BY THE GERMAN POLITICIANS AND UNION COMMISSARS.
$$$

As preface, consider several data items. The Greek
Govt cuts amount to 10% of the budget. If the USGovt
ordered such cuts, the impact would be absolutely
enormous. The Greek GDP has declined by 10.6% in
the last year. Tax receipts are down by 7% as 60,000
small business have failed. The Greek Govt debt/GDP
ratio is 160% versus a nonsensical 120% target.
The bond haircut proposed is 70% when 100% is the
more appropriate figure.

Prime Minister Papademos has appealed to the Greek
sense of responsibility, as the unelected leader
turns desperate to avoid chaos, riots, and destruction.
His call to sacrifice seems a ploy to aid the bankers
further. He cited small sacrifices in order to avoid
a total national loss. The March 20th deadline
for $19 billion payment looms near. The agreement
on funding and budgets seems like an impossible
task. Look for any Parliament accord on a Greek
budget to blow up quickly and be revisited. A 22%
minimum wage cut seems enough to ignite more street
riots. The spending cuts equal 7% of Gross Domestic
Product over three years. Great sacrifice and great
losses are the only assured commodities in Greece.
A 48-hour strike crippled the economy again. Some
factional leaders are pushing for debt forgiveness.
What seems not at all understood is that the
austerity measures increase the deficits and inflict
further structural damage to the economy as a whole.
Interspersed within the debate and commentary is
a profound resentment of Germany,
with swastika and nazi characterizations, the great
predator. Instead, some gratitude should be given
to Germany
for financing an undeserved rise in the Greek standard
of living through massive support of the entire
Southern periphery for ten years. German savings
have been drained by the PIGS nations, all of them.
The impasse in Athens is centered upon bond haircuts, the agreed
upon amounts to which Greek Govt Bonds will be written
down, the losses absorbed by the creditor banks.
See the Bloomberg articles (CLICK HERE
and HERE).

Greece has dithered on developing its austerity
plan, in resistance to the poison pill. Greece requires EUR130 billion
(=US$173 bn) in regular revolving bailouts. Finance
Minister Evangelos Venizelos has been working overtime
to negotiate satisfactory bond writedowns, while
retaining order. Resistance is fierce in Greece to more austerity.
Angry union leaders have conducted general strikes.
The Athens talks stalled after leaders of the three parties backing Greece's
coalition government approved sweeping new austerity
measures, but the resistance has been stern on pension
cuts and related entitlements. Greek police officials
warned of arrests of any European Union officials
arriving to force any new concessions by the Greek
Govt in austerity programs linked with collateral
grabs. See the Yahoo Finance article (CLICK HERE).

Europe moves inexorably toward
a Greek debt failure. The events seem obvious. The
latest evidence centers on the Germans blocking
a final deal struck with the Greeks. The pattern
is clear, laid out in the Hat Trick Letter several
months ago. Politicians run around, enjoy luxury
hotels, fine meals, and limousine service. They
forge deals in the spotlight, but the true power
center lies with the big German banks and the Bundesbank
behind the scenes. The default is coming. The bailouts
are viewed increasingly as wasted money, good money
after money gone bad. Europe is not saved, but rather divided into rich North and poor South.
Resentment inside Greece grows from public reaction to an unelected
leader of Goldman Sachs pedigree. The Athens streets suffer burned buildings, vandalized stores, tear gas,
and general mayhem. The lack of a European summit
with finance ministers is a clear sign that nobody
wants to cut a Greek bailout deal anymore. See the
Zero Hedge article (CLICK HERE).